|
on South East Asia |
| By: | Takeshi Kobayashi; Mark Spiegel; Nobuyoshi Yamori |
| Abstract: | One of the primary motivations offered by the Bank of Japan (BOJ) for its quantitative easing program -- whereby it maintained a current account balance target in excess of required reserves, effectively pegging short-term interest rates at zero -- was to maintain credit extension by the troubled Japanese financial sector. We conduct an event study concerning the anticipated impact of quantitative easing on the Japanese banking sector by examining the impact of the introduction and expansion of the policy on Japanese bank equity values. We find that excess returns of Japanese banks were greater when increases in the BOJ current account balance target were accompanied by “nonstandard” expansionary policies, such as raising the ceiling on BOJ purchases of longterm Japanese government bonds. We also provide cross-sectional evidence that suggests that the market perceived that the quantitative easing program would disproportionately benefit financially weaker Japanese banks. |
| Keywords: | Monetary policy - Japan ; Bank of Japan ; Banks and banking - Japan |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:2006-19&r=sea |
| By: | Prema-chandra Athukorala |
| Abstract: | This paper examines the implications of international fragmentation of production for trade patterns in the Pacific Rim, with special emphasis on regional and global integration of countries in East Asia. The analysis reveals that the degree of dependence of East Asia on this new global division labour is much larger compared to the other countries in the Pacific Rim and Europe. Network- related trade in parts and components has certainly strengthened intra-regional economic interdependence among the East Asian countries, but this has not lessoned the dependence of growth dynamism of these countries on the global economy. The operation of cross-border production networks depends inexorably on trade in final goods with North America and the European Union. The paper also probes the challenges posed by the fragmentation-based international division of labour for the 'flying geese' approach to the analysis of growth patterns in East Asia. |
| Keywords: | production fragmentation, multinational production networks, economic transition in China |
| JEL: | F15 F23 O53 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2006-09&r=sea |
| By: | Lee Bransetter; Nicholas Lardy |
| Abstract: | As China has become an increasingly important part of the global trading system over the past two decades, interest in the country and its international economic policies has increased among international economists who are not China specialists. This paper represents an attempt to provide the international economics community with a succinct summary of the major steps in the evolution of Chinese policy toward international trade and foreign direct investment and their consequences since the late 1970s. In doing so, we draw upon and update a number of more comprehensive book-length treatments of the subject. It is our hope that this paper will prove to be a useful resource for the growing numbers of international economists who are exploring China-related issues, either in the classroom or in their own research. |
| JEL: | O53 O19 F43 F14 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12373&r=sea |
| By: | Swapan K. Bhattacharya; Biswanath Bhattacharyay |
| Abstract: | The seven-nation Bay of Bengal Initiative for Multisectoral Technical and Economic Cooperation (BIMSTEC), comprising Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand is emerging as one of the major subregional groups in Asia. Japan is the second largest trading partner for BIMSTEC countries. The paper discusses prospects for strengthening BIMSTEC countries and Japan’s cooperation and integration in trade, investment, and finance. It analyzes the trends and patterns of bilateral and subregional economic cooperation in Asia as well as BIMSTEC-Japan trade. It examines empirically whether BIMSTEC-Japan economic cooperation will increase intraregional trade using a gravity model. Japan-BIMSTEC cooperation will increase intraregional trade but not uniformly for all countries. The potential losses on trade for some countries will be compensated by gains in other areas, such as, stepped up resource transfer, foreign direct investment flows, technology transfer, and market access to services. The paper also presents the need for and possible areas of economic cooperation and integration in investment and finance. |
| JEL: | F02 F13 F15 F36 F40 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1725&r=sea |
| By: | Marvin Goodfriend; Eswar Prasad |
| Abstract: | As China's economy becomes more market based and continues its rapid integration into the global economy, having an independent and effective monetary policy regime oriented to domestic objectives will become increasingly important. Employing modern principles of monetary policy in light of the current state of China's financial institutions, we motivate and present a package of proposals to guide the operation of a new monetary policy regime. Specifically, we recommend an explicit low long-run inflation objective, operational independence for the People's Bank of China (PBC) with formal strategic guidance from the government, and a minimal set of financial sector reforms (to make the Chinese banking system robust against interest rate fluctuations). We argue that anchoring monetary policy with an explicit inflation objective would be the most reliable way for the PBC to tie down inflation expectations, and thereby enable monetary policy to make the best contribution to macroeconomic and financial stability, as well as economic growth. The management and monitoring of money (and credit) growth by the PBC would continue to play a useful role in the stabilization of inflation, but a money target would not constitute a good stand-alone nominal anchor. |
| Keywords: | Monetary policy , China , Flexible exchange rates , Inflation targeting , Financial sector , Bank reforms , Central bank policy , Central bank role , Money supply , Financial systems , Transition economies , |
| Date: | 2006–05–10 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/111&r=sea |
| By: | Richard Podpiera |
| Abstract: | Substantial effort has been devoted to reforming China's banking system in recent years. The authorities recapitalized three large state-owned banks, introduced new governance structures, and brought in foreign strategic investors. However, it remains unclear the extent to which currently reported data reflect the true credit risk in loan portfolios and whether lending decisions have started to be taken on a commercial basis. We examine lending growth, credit pricing, and regional patterns in lending from 1997 through 2004 to look for evidence of changing behavior of the large state-owned commercial banks (SCBs). We find that the SCBs have slowed down credit expansion, but that the pricing of credit risk remains undifferentiated and banks do not appear to take enterprise profitability into account when making lending decisions. Controlling for several factors, we find that large SCBs have continued to lose market share to other financial institutions in provinces with more profitable enterprises. The full impact of the most recent reforms will become clear only in several years, however, and these issues should be revisited in future research. |
| Keywords: | Banking systems , China , Credit risk , Bank supervision , Bank regulations , |
| Date: | 2006–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/71&r=sea |
| By: | Wenjing Chen, Li Wei (Chinese Academy of International Trade and Economic Cooperation) |
| Abstract: | In 2004, China became the third largest trading economy in the world. Although official overall average import tariff rate was reduced to 9.9% as of January 2005, actual tariff rates are likely much lower. Although further tariff reductions may lead to renewed and expanded global trade growth, trade facilitation will play an increasingly important role in promoting global trade. Costs associated with implementation of trade facilitation measures may be classified into four categories: new regulations, institutional changes, training, and equipment and infrastructure. The study was generally not able to determine costs of specific trade facilitation measures in China. However, Customs and the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) are the two government departments that are most deeply involved in trade facilitation, and a review of their expenditures in this field provides useful information on equipment/infrastructure costs that may be associated with implementing modern trade facilitation systems. |
| Keywords: | GATT, WTO, Trade Liberalization |
| JEL: | F1 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:esc:wpaper:506&r=sea |
| By: | Eggleston, Karen; Ling, Li; Qingyue, Meng; Lindelow, Magnus; Wagstaff, Adam |
| Abstract: | The authors report the results of a review of the Chinese-language and English-language literatures on service delivery in China, asking how well China ' s health care providers perform, what determines their performance, and how the government can improve it. They find current performance leaves room for improvement in terms of quality, responsiveness to patients, efficiency, cost escalation, and equity. The literature suggests that these problems will not be solved by simply shifting ownership to the private sector, or by simply encouraging providers-public and private-to compete with one another for individual patients. In contrast, substantial improvements could be (and in some places have already been) made by changing the way providers are paid-shifting away from fee-for-service and the distorted price schedule toward prospective payments. Active purchasing by insurers could further improve outcomes. |
| Keywords: | Health Monitoring & Evaluation,Health Law,Health Economics & Finance,Health Systems Development & Reform,Population Policies |
| Date: | 2006–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3978&r=sea |
| By: | Veit, Wolfgang |
| Abstract: | Over the past 15 years the mutual importance of institutional economics and development economics have grown strongly. This paper attempts to apply institutional analysis to issues of economic development by analysing China’s reform process after her accession to the WTO on the background of the hypothesis of vertically dependent institutions. It will be shown that institutions on a lower level (e.g. a fixed exchange rate regime) are dominated by higher level institutions like (e.g. laws governing firms, financial and labour markets). The latter are dominated by institutions on a higher level, for example by regulations governing the economic and political system. Consequently, economic policy options like a change in the exchange rate regime will depend on adjustments in areas ranging from constitutional to company law. In the second chapter, the concept of hierarchical institutions is introduced. In the third chapter, the general results of China’s recent trade liberalisation under WTO rules and the issue of a fixed exchange rate to the US Dollar are recounted. In the fourth chapter, reforms necessitated by China’s accession to the WTO, and reflected by the present exchange rate regime, are identified. This is followed by the analysis of institutions that are conducive to successful implementation of those reforms in China. |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:gdec05:3506&r=sea |
| By: | Yose Rizal Damuri (Centre for Strategic and International Studies) |
| Abstract: | As a member of WTO, Indonesia has been involved in the discussion of the WTO negotiating group on trade facilitation (NGTF). This study aims to examine the current situation of trade facilitation in Indonesia, as well to assess the needs and priorities of various measures related to the trade facilitation negotiations. |
| Keywords: | WTO, Trade Facilitation, Indonesia |
| JEL: | F1 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:esc:wpaper:1006&r=sea |
| By: | Pemsl, D.; Waibel, H.; Gutierrez, A.P. |
| Abstract: | The use of genetically engineered crop varieties has recently become one option to prevent pest damage in agriculture. The promoters of biotechnology stress the great potential for yield increase and pesticide reduction while the critics point out the potential risks for biodiversity and human health as well as institutional problems for implementation especially in developing countries. The objective of this paper is an in-depth economic analysis of Btcotton production in North East China under small-scale conditions and several years after technology introduction. Data were collected in 2002 (March - October) in Linqing County, a major cotton growing area of Shandong Province, China. Data collection comprised a seasonlong monitoring of Bt-cotton production with 150 farmers from five villages, and three complementary household interviews. In addition, plot-level biological testing was carried out to determine the actual Bt toxin concentration in the varieties that were used by the farmers. All farmers in the case study were growing insect resistant Bt-cotton varieties in 2002. Nevertheless, they sprayed high amounts of chemical pesticides that were almost entirely insecticides. A proportion of 40% of the pesticides applied belonged to the categories extremely or highly hazardous (WHO classes Ia and Ib). The paper reviews methodological issues inherent to impact assessment of crop biotechnology and identifies market and institutional failure as possible reasons for continued high pesticide use. The production function methodology with damage control function was applied and it was found that for both damage control inputs, i.e. Bt and insecticides the coefficients were not significantly different from zero. In contrast to studies that treat Bt varieties as dummy variable in economic models, in this research it was possible to specify Bt toxin concentration in cotton leaf samples as a continuous variable. The results of this study support the notion that introducing Biotechnology in developing countries without enabling institutions that assure proper use of the technology can considerably limit its benefits. Hence it is important to include institutional criteria in the evaluation of agricultural biotechnology especially in developing countries. |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:gdec05:3498&r=sea |
| By: | Guglielmo Maria Caporale; Luis A. Gil-Alana |
| Abstract: | In this paper we use a general procedure to detect structural breaks at unknown points in time which allows for different orders of integration and deterministic components in each subsample (see Gil-Alana, 2006). First, we extend it to the non-linear case, and show by means of Monte Carlo experiments that the procedure performs well in a non-linear environment. Second, we apply it to test for breaks in the unemployment rate in the US, the UK and Japan. Our results shed some light on the empirical relevance of alternative unemployment theories for these countries. Specifically, a structuralist interpretation appears more appropriate for the US and Japan, whilst a hysteresis model accounts better for the UK experience (and also for the Japanese one in the second subsample). We interpret these findings in terms of different labour market features. |
| Keywords: | unemployment, structural breaks, fractional integration |
| JEL: | C32 E32 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1734&r=sea |
| By: | Tadashi Fukui (Faculty of Economics, Kyoto Sangyo University); Yasushi Iwamoto (Faculty of Economics, University of Tokyo) |
| Abstract: | As the Japanese population structure changes, health care and long-term care costs will steadily increase. The current style of financing (pay-as-you-go) will create a large increase in future burden of these costs. This paper studies an alternative policy that prefunds the social insurance benefits for the elderly. During a transition process, the proposed scheme maintains a higher contribution rate in order to accumulate sufficient funds. Under our baseline scenario, the sum of the contribution rates toward health insurance and long-term care insurance increases from 5.06 percent of earnings to 12.41 percent of the same. The rate of increase in overall burdens, including taxes and subsidies, is 63 percent. Our sensitivity analysis has shown that the quantitative implications of the increase in total burdens depend on social cost scenarios, the labor force, and the interest rate. However, labor force scenarios do not have a considerable impact on the rate of burden. As against this, the setting of social costs has a significant impact on the same. Even under the most optimistic scenario, the rate of increase in total burden is 34 percent. Even though we cannot predict the exact amount of the necessary contribution rate that is capable enough to transfer the funded system, what we are sure of is that a significant increase in the contribution rate is inevitable. |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:tky:fseres:2006cf432&r=sea |
| By: | Mara Faccio; Rajdeep Sengupta |
| Abstract: | This paper provides a comprehensive examination of the ways in which companies respond to a country-wide crisis through the restructuring of their assets (through asset sales, mergers or liquidations) or liabilities. We find the restructuring of liabilities to be the most common type of response. On the other hand, we argue that firms may be reluctant to engage in major asset sales due to substantial price discounts that need to be applied to these transactions during the crisis. In fact, we document that transaction multiples dropped by 40% during the crisis, compared to a pre-crisis period. We contrast financial and corporate governance considerations and find strong support for the notion that, during a crisis, financial constraints have a large impact on the restructuring choice. However, we find corporate governance (e.g., control) considerations to matter only marginally both in statistical and economic terms. |
| Keywords: | Corporate governance ; Financial crises - Asia |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2006-044&r=sea |
| By: | Philip Borkin (The Treasury) |
| Abstract: | This paper looks at the importance of the terms of trade for the New Zealand economy by examining the impact of changes in the trend and volatility of the terms of trade on economic growth. It is found that the volatility in the terms of trade has had a negative impact on New Zealand’s economic growth between 1950 and 2005. However, it is found that rather than the level of the terms of trade having an impact on growth, it is the level of export prices that have had a significant positive effect with the level of import prices having an insignificant impact. This paper also examines the historical patterns in the trend and volatility to see if and why they have changed over time. As New Zealand is largely an exporter of primary commodities and importer of manufactures, the Prebisch- Singer hypothesis suggests that its terms of trade should have declined over time. However, this paper finds that the terms of trade has not declined and in fact, is showing an increasing trend since 1974. It is also found that the volatility in the terms of trade has declined over time. Using this evidence as well as other issues such as world trade reform and China, this paper draws conclusions as to future movements of New Zealand’s terms of trade as well as any possible economic growth implications. |
| Keywords: | Terms of trade; Commodity Prices; New Zealand; Economic Growth; Prebisch-Singer Hypothesis |
| JEL: | E30 F10 F41 F43 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:nzt:nztwps:06/09&r=sea |
| By: | Hing Vutha, Larry Strange and K.A.S. Murshid (Cambodia Development Resource Institute) |
| Abstract: | The informal meeting of core Asia-Pacific Research and Training Network on Trade (ARTNeT) research institutions organized by UNESCAP and IDRC in June 2004 in Bangkok highlighted the need for capacity building of research institutions from Least Developed Countries in the region. Llittle research or information is, however, available on what the needs of these research institutions are, their existing trade research capacity and how this differs across countries. This study sets out to address the key following issues: What are the existing trade research capacities of research institutions in LDCs and low-income developing countries in the Asia-Pacific region? What are their capacity-building needs in trade policy research? |
| Keywords: | Research Capacity, LDCs |
| JEL: | F1 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:esc:wpaper:105&r=sea |
| By: | Gloria O. Pasadilla (Philippine Institute for Development Studies) |
| Abstract: | The paper analyzes how various preferential trading arrangements deal with agriculture liberalization and examines a few case studies highlighting the provisions on agriculture. It assesses the effect of preferential trade agreements on agriculture trade flows in the case of ASEAN. It finds that while the tariff reduction on all goods, including agriculture, in ASEAN provides a marked advantage from the MFN tariff rates, intra-ASEAN agriculture trade have not been all that significant. |
| Keywords: | Preferential Trading Agreements, Agricultural Liberalization |
| JEL: | F1 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:esc:wpaper:1106&r=sea |
| By: | Chantapong, Saovanee; Menkhoff, Lukas |
| Abstract: | The paper estimates and compares cost efficiency of domestic and foreign banks in Thailand by using bank-panel data between 1995 and 2003. It also examines the effect of foreign bank entry on banking efficiency in Thailand since the significant acquisitions by foreign banks after the 1997 financial crisis. The widely used translog functional form specification is statistically tested by pooled regressions. The estimated results suggest that the unit costs of production of domestic and foreign banks are indistinguishable, although the two types of banks focus on different areas of the banking business. The findings suggest that based on bank operating efficiency, if foreign banks represent the best-practice banks in the industry, to a large extent, domestic banks in Thailand have caught up to the best-practice standards throughout 1995-2003, significantly after the 1997 financial crisis . This may be due to greater foreign participation through acquisitions, which increases the competitive pressure in the banking industry, and also to financial restructuring of domestic banks, which increases the cost efficiency of domestic banks, thereby benefiting banking customers. |
| Keywords: | Banks, Financial Policy, Capital and Ownership Structure, Cost Efficiency |
| JEL: | D24 G21 G32 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:gdec05:3482&r=sea |
| By: | Lamin Leigh |
| Abstract: | Hong Kong SAR's population is aging rapidly. This paper concludes that, without a change in policies, aging could adversely affect growth and living standards. While higher labor productivity growth and increased migration of younger skilled workers from the Chinese mainland, would attenuate the economic impact of aging, they would not offset it fully. Aging will also put pressure on public finances, particularly as a result of rising health care costs. There is a relatively narrow window of opportunity to implement policies to lessen the impact of aging, given that the demographic effects could start setting in as early as 2015 when the working population's support ratio peaks. In recent years, the Hong Kong SAR authorities have been focusing on policies that could help limit the fiscal impact of aging, including continued expenditure restraint on non-age-sensitive areas, reform of health care financing (including introducing private health insurance system), and tax reforms. |
| Date: | 2006–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/87&r=sea |
| By: | Fang Cai; Edward Howorka; Jon Wongswan |
| Abstract: | This paper studies the transmission of volatility and trading activity in the foreign exchange market across trading regions for the euro-dollar and dollar-yen currency pairs, using high-frequency intraday data from Electronic Broking Services (EBS). In contrast with previous studies that use indicative quote frequency to proxy for trading activity, we use actual regional trading volume to identify five distinct trading regions in the foreign exchange market: Asia Pacific, the Asia-Europe overlap, Europe, the Europe-America overlap, and America. Based on realized volatility computed from high-frequency data and a regional volatility model, we find statistically significant evidence for volatility spillovers at both the own-region and the inter-region levels, but the economic significance of own-region spillovers is much more important than that of inter-region spillovers. We also examine the transmission of trading activity (trading volume and number of transactions) across the five trading regions and find similar results to those for volatility, but the economic significance of own-region spillovers is even more dominant. |
| Keywords: | Foreign exchange rates ; International finance |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:863&r=sea |
| By: | Ronald Lee; Sang-Hyop Lee; Andrew Mason |
| Abstract: | Understanding the economic lifecycle – how it varies and why – is important in its own right, but is also critical to understanding how changes in population age structure influence many features of the macroeconomy. Economic behavior over the life cycle can be summarized by the average levels of consumption and labor earnings at each age, as shaped by biology, culture, institutions and individual choice. Here we present estimates of these in detail for the US and Taiwan, showing the roles played by public and familial transfer systems as well as asset accumulation, and present more basic profiles for selected additional countries drawing on studies from a larger project. Average economic dependency occurs when consumption exceeds labor earnings, typically in childhood and old age. A changing population age distribution alters the relative numbers of weighted consumers and producers, as summarized by the support ratio. The “demographic dividend” occurs during a sustained period of improving support ratios during the demographic transition, as can be shown using these profiles. The estimated cross-sectional age profiles of labor income have a broadly similar hump shape. However, there are striking contrasts in the timing of earnings over the life cycle. The consumption profiles reveal even more striking contrasts, with a flat age profile of total adult consumption in Taiwan and a steeply rising one in the U.S. We believe these differences reflect the extended family versus the state as the primary locus of transfers to the elderly. Profiles for private consumption are also quite variable, with Indonesia peaking early around age 25, Taiwan being essentially flat, and the US peaking late at around 55. Private expenditures on education show wide variations, with unusually high expenditures in some Asian countries. Because of possible public-private substitutions, it is questionable to assign causality to either for differences in total consumption, but it is hard to avoid noticing that without public spending on Medicare and institutional Medicaid in the U.S., total consumption would decline after 55, whereas with them, it rises strongly. There is only a short period of life during which production exceeds consumption barely more than 30 years in the US, Taiwan, and Thailand. The brevity of this phase contrasts sharply with high life expectancy, approaching 80 years in many countries. |
| JEL: | J1 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12379&r=sea |
| By: | Klump, Rainer; Prüfer, Patricia |
| Abstract: | The UN Millennium Development Goals have recognized poverty reduction as the main goal of global development policy. A comprehensive framework to evaluate the effectiveness of single policy measures and policy packages with respect to poverty reduction is still lacking, though. Policy evaluation is exposed to manifold uncertainties given the dependency of the preferred outcomes on a chosen policy, available information, and policy makers' preferences. We show that Bayesian Model Averaging (BMA) is most valuable in this context as it addresses the parameter and model uncertainty inherent in development policies. Using data for the 61 Vietnamese provinces we are able to ascertain the most important determinants of poverty from a large number of potential explanatory variables. |
| Keywords: | Poverty determinants, Vietnam, model uncertainty, Bayesian Model Averaging (BMA) |
| JEL: | C11 C52 O18 O53 R11 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:gdec05:3500&r=sea |
| By: | Matthew T. Jones; Meral Karasulu |
| Abstract: | The objective of this paper is to provide a retrospective assessment of our ability to have predicted the impact of the 1997 crisis on the Korean corporate sector. We perform some simple stress tests on the aggregate balance sheets and income statements of the corporate sector to determine what could have been foreseen before the onset of the crisis. Our results show that data available in mid-1997 clearly showed that the corporate sector was very sensitive to various shocks, particularly interest rate shocks. Had stress tests been performed at the time, they would have revealed that the corporate sector was highly vulnerable to adverse economic developments. Our findings suggest that close surveillance of corporate sector balance sheets can play a useful role in understanding potential financial vulnerabilities. |
| Keywords: | Financial crisis , Korea, Republic of , Economic forecasting , Interest rates , Financial risk , |
| Date: | 2006–05–10 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/114&r=sea |
| By: | Nauro F. Campos (Brunel University, CEPR and IZA Bonn); Cheng Hsiao (University of Southern California); Jeffrey B. Nugent (University of Southern California) |
| Abstract: | Recent research convincingly shows that crises beget reform. Although the consensus is that economic crises foster macroeconomic stabilization, it is silent on which types of crises cause which types of reform. Is it economic or political crises that are the most important drivers of structural reforms? To answer this question we put forward evidence on trade and labour market liberalization from panel data on more than 100 developed and developing countries from 1950 to 2000. We find important differences in the effects of the two types of crises on the two reforms across regions and even from one measure of crisis to another. Yet, in general, we consistently find that political considerations (political crises as well as political institutions) are more important determinants of these reforms than economic crises. This finding is robust to the inclusion of interdependencies between the two types of crises, feedbacks between the two types of reform, the use of alternative measures of political and economic crises and whether or not the data are pooled across all countries or only across regions. |
| Keywords: | economic reform, economic crisis, political crisis, trade liberalisation, labour market reform |
| JEL: | H11 K20 E32 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2217&r=sea |
| By: | Pushpa Raj Rajkarnikar (Institute for Policy Research and Development) |
| Abstract: | Trade facilitation has been a longstanding and traditional feature of GATT, which is expected to have serious implication for developing member countries. This study aims to evaluate the need for and the cost of implementing trade facilitation measures in Nepal in the context of the ongoing WTO negotiation. Nepal initiated market oriented economic reforms in 1985. Trade liberalization under the economic reform was significant. However, trade facilitation has got due attention only in recent years. HMG introduced ASYCUDA in selected custom offices and implemented a three years (2003-2006) Customs Reform Action Plan in the process of TF. |
| Keywords: | GATT, WTO, Trade Liberalization |
| JEL: | F1 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:esc:wpaper:806&r=sea |
| By: | Mustafizur Rahman; Kazi Mahmudur Rahman (Centre for Policy Dialogue) |
| Abstract: | Special and differential treatment (S&D) provisions introduced in the GATT and the WTO in support of strengthened global integration of the developing country (DC) and least developed country (LDC) members have come under increasing scrutiny and criticism in recent years. One criticism has been that most of the S&D provisions are weak in their formulations, i.e., are expressed in the form of best endeavour clauses and hence are non-enforceable. The other strand of argument is that that in order for the S&D provisions to be effective and enforceable they ought to be targeted to countries that are in need of them most and be applied not in general, but with discretion, by identifying and targeting select group of developing countries that require a particular type of support most. |
| Keywords: | Special and differential treatment, GATT |
| JEL: | F1 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:esc:wpaper:1306&r=sea |
| By: | Iris Claus; Aaron Gill; Boram Lee; Nathan McLellan (The Treasury) |
| Abstract: | This paper examines the effects of fiscal policy, measured by changes in government spending and net tax (government tax revenue less transfer payments), on New Zealand GDP. The framework of analysis is a structural vector autoregression (VAR) model of the New Zealand economy, employing and extending estimation techniques used by Blanchard and Perotti (2002). This model is then used to examine the dynamic effects of changes in government spending, taxes and transfers on GDP and the contributions of discretionary fiscal policy to New Zealand business cycles. |
| Keywords: | Fiscal policy, business cycle fluctuations, vector autoregression |
| JEL: | C32 E32 E62 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:nzt:nztwps:06/08&r=sea |
| By: | Ephraim W. Chirwa; Yohane Khamfula; Montfort Mlachila |
| Abstract: | This paper presents a new model based on the loan-pushing model by Basu (1991) to show how a domestic debt crisis can occur in a low-income country following donor herding. The model focuses on the rational herding behavior of donors due to payoff and information externalities. Although there are many theoretical models on herding behavior, these models have not formally considered the relationship between donor herding and domestic debt crisis in a low-income country. This paper is an attempt to fill this gap. The paper shows that due to donor herding behavior a domestic debt crisis can occur once the actual debt level is above the desirable one. |
| Keywords: | Domestic debt , Low income developing countries , Government expenditures , Economic models , |
| Date: | 2006–05–10 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/109&r=sea |
| By: | Jorge A. Chan-Lau |
| Abstract: | This paper reviews a number of different techniques for estimating default probabilities from the prices of publicly traded securities. These techniques are useful for assessing credit exposure, systemic risk, and stress testing financial systems. The choice of techniques was guided by their ease of implementation and their applicability to a wide cross-section of countries and markets. Simple one-period cases are studied to sharpen the reader's intuition, and the usefulness of each technique for enhancing financial surveillance is illustrated with real applications. |
| Keywords: | Securities markets , Financial risk , Financial sector , Exchange rate policy surveillance , Bonds , Asset prices , International financial system , Financial institutions , |
| Date: | 2006–05–02 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/104&r=sea |
| By: | Gian Maria Milesi-Ferretti; Philip R. Lane |
| Abstract: | We construct estimates of external assets and liabilities for 145 countries for the period 1970-2004. We describe our estimation methods and present key features of the data at the country and the global level. We focus on trends in net and gross external positions, and the composition of international portfolios, distinguishing between foreign direct investment, portfolio equity investment, official reserves, and external debt. We document the increasing importance of equity financing and the improvement in the external position for emerging markets, and the differing pace of financial integration between advanced and developing economies. We also show the existence of a global discrepancy between estimated foreign assets and liabilities, and identify the asset categories that account for this discrepancy. |
| Keywords: | Financial assets , Foreign investment , External debt , Reserves , |
| Date: | 2006–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/69&r=sea |
| By: | Chris Manning; Alexandra Sidorenko |
| Abstract: | This study assesses the extent of regulation of in-migration of professionals into ASEAN countries. The focus is on two selected sectors, health care and information technology (IT). Both sectors have been given special attention in regional trade negotiations which seek to increase the mobility of professionals in ASEAN. The study is set in the framework of rising demand for more skilled manpower, associated with rapid economic growth and a high income elasticity of demand for services. We develop measures to assess the extent of regulation of in-migration in recipient countries, as well as the depth of commitments to the mobility of professionals under Mode 4. The study links several indices of regulation to stages of economic development. It finds that the more advanced countries in ASEAN tend to have made more liberal commitments under Mode 4. They also had more liberal regimes for international movements of skilled manpower in both health and IT. However there was less difference between more and less developed countries regarding general visa and work permit arrangements. Finally, because of their greater social significance, regulations related to the migration of health professionals tended to be more restrictive than for IT professionals. |
| Keywords: | International Migration, Trade and Labour Markets, Professional Labour, Health Care Professionals |
| JEL: | F16 F22 I18 J44 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2006-08&r=sea |
| By: | Juan Zalduendo; Uma Ramakrishnan |
| Abstract: | This paper examines the role of IMF-supported programs in crisis prevention; specifically, whether, conditional on an episode of intense market pressures, IMF financial support helps prevent a capital account crisis from developing and, if so, through what channels. In doing so, the paper distinguishes between the seal of approval inherent in IMF support and its financing, evaluates the interaction of IMF support with economic policies, and assesses whether IMF financing has a different impact on the likelihood of a crisis than other forms of liquidity. The main result is that IMF financing helps prevent crises through the liquidity provided (i.e., money matters). However, since the effect holds even after controlling for (gross) foreign exchange reserves, stronger policies and the seal of approval under an IMFsupported program must also play a role. Finally, the results suggest that IMF financing as a crisis prevention tool is most effective for an intermediate range of economic fundamentals. |
| Keywords: | Fund-supported adjustment programs , Balance of payments assistance , Crisis prevention , Capital account , Financial crisis , |
| Date: | 2006–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/75&r=sea |
| By: | Jun Il Kim |
| Abstract: | This paper presents an analytical framework for considering the role of IMF-supported programs in preventing crises, particularly capital account crises. The model builds upon the global games framework to establish a unique relationship between the crisis probability and the parameters of the program, which is assumed to be negotiated between the IMF and the member country, taking explicit account of each party's interests. In the model, from the perspective of the borrowing country, IMF financing and policy adjustment are (perfect) substitutes inasmuch as they both contribute to the country's liquidity and thus reduce the likelihood of a crisis. In equilibrium, however, IMF financing promotes stronger policies, implying that financing and adjustment are strong complements in crisis prevention. Conditionality plays a crucial role in sustaining the program, providing mutual assurances-to the member country that, if it undertakes the agreed policies, financing will indeed be forthcoming, and to the IMF that the country will implement the agreed policies as the IMF disburses its resources. The model helps explain how liquidity crises may come about, how IMF support can reduce the likelihood of a crisis by providing liquidity and sustaining stronger policies, and why the observed mix between financing and adjustment may vary across programs. |
| Date: | 2006–07–07 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/156&r=sea |