nep-sea New Economics Papers
on South East Asia
Issue of 2007‒01‒06
six papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Is Asia Prepared for an Aging Population? By Peter S. Heller
  2. What's Driving Investment in China? By Ray Brooks; Steven Barnett
  3. Asian Equity Markets: Growth, Opportunities, and Challenges By Hiroko Oura; Andreas Jobst; Charles Frederick Kramer; Catriona Purfield
  4. Financial Integration in Asia: Estimating the Risk-Sharing Gains for Australia and Other Nations By Benoît Mercereau
  5. Can Good Events Lead to Bad Outcomes? Endogenous Banking Crises and Fiscal Policy Responses By Celine Rochon; Andrew Feltenstein
  6. Relative Efficiency, Scale Effect, and Scope Effect of Public Hospitals: Evidence from Australia By Jian Wang; Zhong Zhao; Amir Mahmood

  1. By: Peter S. Heller
    Abstract: Many Asian countries (such as China, Singapore, Korea, Thailand, Malaysia, Indonesia, India, and the Philippines) will experience a significant aging of their populations during the next several decades. This paper explores how these aging Asian countries are addressing and anticipating the challenges of an aging society. It suggests that Asia's preparedness for an aging population is decidedly mixed. While growth policies have been successful, much work is still needed in many countries to establish an adequate and farsighted policy framework in the areas of pensions, health insurance, and labor market policies.
    Date: 2006–12–12
  2. By: Ray Brooks; Steven Barnett
    Abstract: Investment has grown rapidly in China in recent years, reaching more than 40 percent of GDP. Despite good progress on bank and enterprise reforms, weaknesses remain that could contribute to inefficient investment decisions. Manufacturing, infrastructure, and real estate have been the drivers of fixed asset investment. Econometric analysis presented in the paper suggests that manufacturing investment is strongly correlated with firms' liquidity, largely retained earnings. Analysis of residential real estate investment shows that it is weakly correlated with real household income growth and real mortgage interest rates. A policy implication of these findings is that reducing liquidity in firms, for example by requiring state-owned enterprises to pay dividends to the government, and using monetary policy to reduce liquidity increase real interest rates, would slow investment in manufacturing and real estate.
    Keywords: China , investment , capacity , Investment , China , Absorptive capacity , Resource allocation ,
    Date: 2006–11–30
  3. By: Hiroko Oura; Andreas Jobst; Charles Frederick Kramer; Catriona Purfield
    Abstract: Asian equity markets have grown significantly in size since the early 1990s, driven by strong international investor inflows, growing regional financial integration, capital account liberalization, and structural improvements to markets. The development of equity markets provides a more diversified set of channels for financial intermediation to support growth, thus bolstering medium-term financial stability. At the same time, as highlighted by the May-June 2006 market corrections, the increasing role of stock markets potentially changes the nature of macroeconomic and financial stability risks, as well as the policy requirements for dealing with these risks.
    Keywords: Equity markets , Asian financial markets , financial integration , financial stability , international capital markets , Stock markets , Asia , Capital markets , Financial stability , International capital markets ,
    Date: 2006–12–01
  4. By: Benoît Mercereau
    Abstract: Holding foreign assets reduces the volatility of a country's income by allowing countries to share risk. Yet, financial integration is limited in Asia. This paper estimates how much Australia and other countries in the Asia-Pacific region would gain from greater financial integration. The results suggest that these welfare gains are large, which argues in favor of a progressive capital account liberalization across the region.
    Keywords: Risk-sharing , international diversification , regional integration , Risk management , Australia , Asia and Pacific , Capital account liberalization , Foreign investment , Financial systems ,
    Date: 2006–12–04
  5. By: Celine Rochon; Andrew Feltenstein
    Abstract: In this paper, we study the impact of labor market restructuring and foreign direct investment on the banking sector, using a dynamic general equilibrium model with a financial sector. Numerical simulations are performed using stylized Chinese data, and banks failures are generated through increases in the growth rate of the labor force, a revaluation of the exchange rate or an increase in debt issue to finance the government deficit, as compared to a benchmark scenario in which banks remain solvent. Thus bank failures can result from what might seem to be either beneficial economic trends, or correct monetary and fiscal policies. We introduce fiscal policies that modify relative factor prices by lowering the capital tax rate and increasing the tax rate on labor. Such policies can prevent banking failures by raising the return to capital. It is shown that such fiscal policies are, in the short run, welfare reducing.
    Keywords: Banking failures , fiscal policies , Banking , China , Fiscal policy , Tax rates , Labor markets , Foreign investment , Economic models ,
    Date: 2006–11–29
  6. By: Jian Wang (Shandong University, China); Zhong Zhao (IZA Bonn, Germany); Amir Mahmood (University of Newcastle, Australia)
    Abstract: Using the 1997-1998 New South Wales public-hospitals comparison data, we investigate the hospital-level inefficiency by applying a stochastic-frontier multiproduct cost function. We use a flexible translog cost function to reduce the measurement errors of the outputs of the hospital. The main findings are: First, inefficiency accounts for 9.3% of total hospital costs in large hospitals and 11.3% in small hospitals, when including complexity indicators. Second, diseconomies of scale exist in very large hospitals, whereas scale economies appear in very small hospitals. Third, scope effects are found in both large and small hospitals. Fourth, small hospitals are more labor-intensive than large hospitals are.
    Keywords: translog cost function, economies of scale and scope, efficiency, public hospital
    JEL: I11 I18 C31
    Date: 2006–12

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