nep-sea New Economics Papers
on South East Asia
Issue of 2008‒08‒21
six papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Unobservable Shocks as Carriers of Contagion: A Dynamic Analysis Using Identified Structural GARCH By Mardi Dungey; George Milunovich; Susan Thorp
  2. Are Emerging Asia’s Reserves Really Too High? By Marta Ruiz-Arranz; Milan Zavadjil
  3. New Methodology for Linking the Regions By Diewert, Erwin
  4. Offshoring and Productivity: Evidence from Japanese Firm-level Data By ITO Banri; WAKASUGI Ryuhei; TOMIURA Eiichi
  5. Landslides in mountainous regions of Northern Vietnam: Causes, protection strategies and the assessment of economic losses By Michael Ahlheim; Oliver Frör; Antonia Heinke; Alwin Keil; Nguyen Minh Duc; Pham Van Dinh; Camille Saint-Macary; Manfred Zeller
  6. Crises and Sudden Stops: Evidence from International Bond and Syndicated-Loan Markes By Graciela L. Kaminsky

  1. By: Mardi Dungey (Univeristy of Cambridge); George Milunovich (Macquarie University); Susan Thorp (University of Technology, Sydney)
    Abstract: Markets in financial crisis may experience heightened sensitivity to news from abroad and they may also spread turbulence into foreign markets, creating contagion. We use a structural GARCH model to separate and measure these two parts of crisis transmission. Unobservable structural shocks are named and linked to source markets using variance decompositions, allowing clearer interpretation of impulse response functions. Applying this method to data from the Asian crisis, we find signifcant contagion from Hong Kong to nearby markets but little heightened sensitivity. Impulse response functions for an equally-weighted equity portfolio show the increasing dominance of Korean and Hong Kong shocks during the crisis, whereas Indonesia\'s infuence shrinks.
    Keywords: Contagion, Structural GARCH
    JEL: F37 C51
    Date: 2008–02–25
  2. By: Marta Ruiz-Arranz; Milan Zavadjil
    Abstract: Empirical analysis does not suggest that reserves are "too high" in the majority of Asian countries, though China may be a special case. Much of the reserve increase in Asia can be explained by an optimal insurance model under which reserves provide a steady source of liquidity to cushion the impact of a sudden stop in capital inflows on output and consumption. Moreover, the benefits of reserves in terms of reduced spreads on privately held external debt further explains the observed growth in reserves since 1997-98. Using threshold estimation techniques, the paper shows that most of Asia can still benefit from higher reserves in terms of reduced borrowing costs.
    Keywords: Asia and Pacific , Reserves , Liquidity , Capital inflows , Production , Consumption , External debt , Emerging markets ,
    Date: 2008–08–06
  3. By: Diewert, Erwin
    Abstract: The paper explains new methodology that was used in the 2005 International Comparison Program (ICP) that compared the relative price levels and GDP levels across 146 countries. In this round of the ICP, the world was divided into 6 regions: OECD, CIS, Africa, South America, Asia Pacific and West Asia. What is new in this round compared to previous rounds of the ICP is that each region was allowed to develop its own product list and collect prices on this list for countries in the region. The regions were then linked using another separate product list and 18 countries across the 6 regions collected prices for products on this list and this information was used to link prices and quantities across the regions. An additional complication was that the final linking of prices and volumes across regions had to respect the regional price and volume measures that were (separately) constructed by the regions.
    Keywords: Index numbers, multilateral comparison methods, GEKS, EKS, Geary-Khamis, Balk, Dikhanov, Iklé, Country Product Dummy (CPD) method, basic headings, St
    JEL: C43 C81 E31 O57
    Date: 2008–07–24
  4. By: ITO Banri; WAKASUGI Ryuhei; TOMIURA Eiichi
    Abstract: It is noteworthy that multinational firms are beginning to offshore a wide range of operations. Theoretical studies have showed that offshoring contributes to a higher productivity. This paper aims to provide evidence of the effect of offshoring on productivity, on the basis of original 2006 survey data of offshore sourcing of Japanese firms. Our estimation shows that the offshoring of tasks for production of intermediates goods and final assembly, as well as the offshoring of tasks for R&D and information services, positively affects productivity growth, while the outsourcing of other service tasks has no significant impact on productivity. It also shows that firms outsourcing to the United States or Europe have realized high production efficiency, followed by firms outsourcing to Asia, in comparison with non-offshoring firms.
    Date: 2008–08
  5. By: Michael Ahlheim; Oliver Frör; Antonia Heinke; Alwin Keil; Nguyen Minh Duc; Pham Van Dinh; Camille Saint-Macary; Manfred Zeller
    Abstract: Landslides are a severe problem during the rainy season in many mountainous regions in Asia where forests have been cut so that mountain slopes are destabilized. In this study we analyze the extent and causes of landslides in a mountainous area in Northern Vietnam as viewed from the perspective of the concerned population. We also scrutinize the ideas of these people regarding suitable landslide protection measures and their willingness to contribute to the practical implementation of these measures. It shows that nearly all people living in this area feel highly concerned about the frequent landslide events and that they support the idea of government programs to mitigate the danger of future landslides. We measure the utility they expect from such a landslide protection program, i. e. the social value of such a program, in terms of their willingness to contribute personally to its implementation. Since budgets are tight in these rural areas where subsistence farming still prevails we also analyze the possibilities to measure these expected utility gains in terms of people's willingness to contribute working time instead of money to the proposed landslide protection program. The prospect of employing such an alternative means of contribution is, however, seen rather critical.
    Keywords: Landslide Protection, Economic Valuation, Vietnam
    JEL: D6 H4 L3 Q25 Q51
    Date: 2008–08
  6. By: Graciela L. Kaminsky
    Abstract: The crises in Mexico, Thailand, and Russia in the 1990s spread quite rapidly to countries as far apart as South Africa and Pakistan. In the aftermath of these crises, many emerging economies lost access to international capital markets. Using data on international primary issuance, this paper studies the determinants of contagion and sudden stops following those crises. The results indicate that contagion and sudden stops tend to occur in economies with financial fragility and current account problems. They also show that high integration in international capital markets exposes countries to sudden stops even in the absence of domestic vulnerabilities.
    JEL: F30 F36
    Date: 2008–08

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