nep-sea New Economics Papers
on South East Asia
Issue of 2009‒05‒02
fourteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. China's exchange rate policy and Asian trade By Alicia García-Herrero; Tuuli Koivu
  2. IMFの融資制度ーアイスランド、ウクライナ、ラトビア、ハンガリーのケースをもとにして By Shirai, Sayuri
  3. The Second Transition: Eastern Europe in Perspective By Ashoka Mody; Daniel Leigh; Stefania Fabrizio
  4. Outward Foreign Direct Investment and Economic Growth: Evidence from Japan and Singapore By Chew-Ging Lee
  5. Banks' Types of Ownership and Efficiency: Evidence from Indonesia By Rasyad A. Parinduri; Yohanes E. Riyanto
  6. Unexpected Volatility Shifts and Efficiency of Emerging Stock Market: The Case of Malaysia By Elgilani E. Elshareif; Akram S. Hasanov; Hui-Boon Tan
  7. Evidence of Engel curves in food away from home: A study of Malaysia By Tey, (John) Yeong-Sheng; Shamsudin, Mad Nasir; Mohamed, Zainalabidin; Abdullah, Amin Mahir; Radam, Alias
  8. Emerging food demand behaviors in Malaysia: Incorporating quality effects in demand analyses By Tey, (John) Yeong-Sheng; Shamsudin, Mad Nasir; Mohamed, Zainalabidin; Abdullah, Amin Mahir; Radam, Alias
  9. Rice Crisis Forensics: How Asian Governments Carelessly Set the World Rice Market on Fire By Tom Slayton
  10. Nonlinear Dynamics in Welfare and the Evolution of World Inequality By Davide Fiaschi - Marzia Romanelli
  11. A managerial economist's forecast for meat consumption in Malaysia: Implications to farmers and investors By Tey, (John) Yeong-Sheng
  12. Transmission Channels Linking Real Estate Shocks with Macroeconomic Performance: Evidence from Malaysia By Hon-Chung Hui
  13. Trade Liberalization and the Value of Firms: Stock Market Evidence from Singapore By Rasyad A. Parinduri; Shandre M. Thangavelu
  14. Does Financial Deepening Improve Income Distribution? A Dynamic Panel Analysis on Developing Countries By Hui-Boon Tan; Siong-Hook Law

  1. By: Alicia García-Herrero; Tuuli Koivu
    Abstract: This paper shows empirically that China's trade balance is sensitive to fluctuations in the real effective exchange rate of the renminbi. However, the current size of the trade surplus is such that exchange rate policy alone will probably not be able to address the imbalance. The potential reduction in the trade surplus resulting from an increase in the renminbi exchange rate is limited mainly because Chinese imports do not react as expected to a renminbi appreciation - they tend to fall rather than increase. By estimating bilateral import equations for China and its major trade partners, we find that the reaction for imports is generally confirmed for China's trade with Southeast Asian countries. That result might be attributable to Asia's vertical integration, as a large share of Chinese imports from Southeast Asia are re-exported. We also find that total exports from a number of Asian countries react negatively to a renminbi appreciation, which points to a dependence of Asian countries' exports on those of China.
    Keywords: China, trade, exports, real exchange rate
    Date: 2009–04
  2. By: Shirai, Sayuri
    Abstract: This paper analyzes mainly three issues regarding IMF functions: (1) IMF Financilg systems, (2) Changes in IMF conditionality since the East Asian crisis of 1997-98 and in the midst of the recent global financial crisis, and (3) IMF lending ability. In particular, this paper describes how the conditionality has been adjusted in reponse to strong criticim by the international community made after the East Asian crisis. Also, a detailed comparison is made between the East Asian crisis and the current crises in Iceland, Ukraine, Lativia and Hungary, with respect to IMf-supported problems and conditionality.
    Keywords: IMF;コンディショナリティ;東アジア経済危機;世界経済危機;東欧・中央諸国
    JEL: F3 F33
    Date: 2009–03–02
  3. By: Ashoka Mody; Daniel Leigh; Stefania Fabrizio
    Abstract: The countries of Eastern Europe achieved two remarkable transitions in the short period of the last two decades: from plan to market and, then, in the run-up to and entry into the European Union, they rode a wave of global trade and financial market integration. Focusing on the second transition, this paper reaches three conclusions. First, by several metrics, East European and East Asian growth performances were about on par from the mid-1990s; both regions far surpassed Latin American growth. Second, the mechanisms of growth in East Europe and East Asia were, however, very different. East Europe relied on a distinctive-often discredited-model, embracing financial integration with structural change to compensate for appreciating real exchange rates. In contrast, East Asia contained further financial integration and maintained steady or depreciating real exchange rates. Third, the ongoing financial turbulence has, thus far, not had an obviously differential impact on emerging market regions: rather, the hot spots in each region reflect individual country vulnerabilities. If the East European growth model is distinctive, is it sustainable and replicable? The paper speculates on the possibilities.
    Keywords: Transition economies , Eastern Europe , Emerging markets , Economic growth , International trade , Economic integration , European Union , Cross country analysis ,
    Date: 2009–03–17
  4. By: Chew-Ging Lee (Nottingham University Business School - Malaysia Campus)
    Abstract: This article aims at analyzing the role of foreign direct investment (FDI) outflows in economic performance and the impact of economic growth on outward FDI with the data of two high income Asian countries: Japan and Singapore. The results show that there is a short-run bidirectional causality between outward FDI and GDP per capita for Singapore, but a long-run bidirectional causality for Japan. In the short-run, per capita income of Japan Granger causes its outward FDI.
    Keywords: Causality; Outward FDI; Growth
    JEL: F20 O10
    Date: 2009–04
  5. By: Rasyad A. Parinduri (Nottingham University Business School - Malaysia Campus); Yohanes E. Riyanto (Department of Economics, National University of Singapore)
    Abstract: We examine the relationship between banks' types of ownership and banks' efficiency using Greene's "true" panel data stochastic frontier model. We find that, even after taking unobserved heterogeneity more properly into account, state-owned banks in Indonesia are the least efficient banks and joint-venture banks are the most efficient ones.
    Keywords: Banking; Ownership types; Efficiency; Stochastic frontier
    JEL: C23 G21
    Date: 2009–04
  6. By: Elgilani E. Elshareif; Akram S. Hasanov; Hui-Boon Tan (Nottingham University Business School - Malaysia Campus)
    Abstract: This paper analyzes the behavior of Malaysian stock market during the intervals of high uncertainty. It highlights the impact of unexpected volatility shifts on this small emerging Asian market, in terms of its efficiency and returns, during the past two decades. The purpose of this study is achieved through the Iterated-Cumulative-Sum-of-Squares-in-Volatility model (ICSS-EGARCH-M Model), which is one of the new approaches in market efficiency studies. The empirical results indicate the rejection of efficient market hypothesis for the market when sudden volatility shifts are considered. The results also provide significant empirical evidences for positive risk-return relationship in the exchanges. In addition, the stock market is found to be more sensitive to global than the local events. The asymmetrical responses to good and bad news are also part of the market behavior.
    Keywords: Efficiency; Volatility shifts; Emerging stock market; ICSS-EGARCH-M approach
    Date: 2009–05
  7. By: Tey, (John) Yeong-Sheng; Shamsudin, Mad Nasir; Mohamed, Zainalabidin; Abdullah, Amin Mahir; Radam, Alias
    Abstract: As Malaysians’ per capita income continues to grow, the food budget shares declines, which refers to Engel’s law. However, the statistics of the various Household Expenditure Surveys in Malaysia reported increasing food away from home (FAFH) budget shares which concerns whether the notion of Engel’s law can be extended to FAFH. By using Household Expenditure Survey 2004/05, the Heckman two-step procedure was applied with the Working-leser and other functional forms to conduct the Engel curves analyses. The empirical results exhibit the same observations as laid down in the Engel’s law. All the estimated expenditure elasticities of demand for FAFH were less than unity. Thus, this study verified that the notion of Engel’s law can be extended to FAFH in Malaysia.
    Keywords: Engel’s law; food away from home; expenditure elasticity
    JEL: Q11
    Date: 2009–03–10
  8. By: Tey, (John) Yeong-Sheng; Shamsudin, Mad Nasir; Mohamed, Zainalabidin; Abdullah, Amin Mahir; Radam, Alias
    Abstract: In this study, the focus is on analyzing food demand behaviors in Malaysia. To be more specific, this study intends to estimate demand elasticities for twelve food categories with incorporation of food quality effects in the demand analyses. This study analyses the data from the Household Expenditure Survey 2004/2005 by Linear Approximate Almost Ideal Demand System (LA/AIDS) and unit value function. The estimated expenditure elasticities indicate that there will be growing demand for all the food categories, especially meat, fish, vegetables, oils and fats, and fruits. The own-price elasticities for rice, eggs, beverage, and oils & fats are more elastic than the rest of the food categories. This study also shows that there is quality effect in food demand.
    Keywords: Food; demand behaviors. quality effects; demand analysis
    JEL: Q11
    Date: 2008–10–11
  9. By: Tom Slayton
    Abstract: The world rice market was aflame last spring and for several months it looked as if the trading edifice that had exhibited such resilience over the last two decades was going to burn to the ground. World prices trebled within less than four months and reached a 30-year inflation-adjusted high. Many market observers thought the previous record set in 1974 would soon be toast. The fire was man-made, not the result of natural developments. While the governments in India, Vietnam, and the Philippines did not to set the world market on fire, that was the unintended result of their actions which threatened both innocent bystanders (low-income rice importers as far away as Africa and Latin America) and, ultimately, poor rice consumers at home. This paper describes what sparked the fire and the accelerants that made a bad situation nearly catastrophic. Fortuitously, when the flames were raging at peak intensity, rain clouds appeared, the winds [market psychology] shifted, and conditions on the ground improved, allowing the fire to die down. It remains to be seen, however, if the trading edifice has been seriously undermined by the actions of decision makers in several key Asian rice exporting and importing countries. In describing the cascading negative effects of these seemingly rational domestic policies, this paper aims to help policy makers in the rice exporting and importing nations to avoid a repeat of the disastrous price spike of 2008.
    Keywords: rice, inflation, prices
    Date: 2009–03
  10. By: Davide Fiaschi - Marzia Romanelli
    Abstract: We propose a methodology to measure countries’ welfare based on the lifetime utility of individuals and apply it to a large sample of countries. In the period 1960-2000 welfare inequality across countries appears stable as the result of increasing inequality in per capita GDP and decreasing inequality in life expectancy. However, the estimated distribution dynamics of welfare points out the emergence of three clusters of countries in 2000: one composed by low-income and low-life expectancy countries (mainly sub-Saharan countries); one by low-income but medium life expectancy countries (most of the highly populated Asian and Latin American countries); and, finally, the last one by high-income and high-life expectancy countries (almost all OECD countries). Such tendencies to polarisation are expected to strengthen in the future. In terms of the world population distribution, from 1960 to 2000 welfare inequality has been decreasing as the result of the falling inequality of both per capita GDP and life expectancy; this fall is mostly explained by the outstanding performance of the highly populated countries, mainly China and India. However, the decreasing trend is expected to be reverted (at most stabilise) in the future. Finally, the estimated distribution dynamics of welfare shows the emergence of two clusters of population, already detected in the distribution of 2000; such polarisation dynamics is expected to further intensify in the future, with the possible emergence of a cluster of populations from sub-Saharan countries.
    Keywords: distribution of welfare, nonparametric methods, polarisation, distribution dynamics, inequality
    JEL: C13 D30 D63 O5
    Date: 2009–04–20
  11. By: Tey, (John) Yeong-Sheng
    Abstract: In this consumer driven chain, the changes in meat consumption at consumer level indeed provide implication for upstream production. While econometrics based analysis and forecast are hard to be understood and digested by farmers or investors, a simple forecast from the perspectives of managerial economics as laid down in the objective of this study perhaps provide valuable insights on the future movement of meat consumption and demand. By using simple forecasting technique using mathematical model, farmers and investors can expect that poultry is to be continuing its vital role as the main source for meat in the country. This is to be coupled with increasing consumption in beef and mutton. However, it is likely the decreasing trend in pork is to be continued. Alternative pig farming system is identically the main concern in promising consumers food safety, freedom of disease, and a way of reclaiming the joy of eating by growing pig that is environmentally sustainable and socially responsible. The challenge is certain, extra efforts must be contributed to reduce the cost of supply chain amid of the increasing retail price of pork that drives consumers away to seek for cheaper substitution.
    Keywords: Meat; consumption; managerial economics
    JEL: Q11 Q13
    Date: 2009–04–20
  12. By: Hon-Chung Hui (Nottingham University Business School - Malaysia Campus)
    Abstract: This paper examines the transmission channels through which property markets propagate shocks to the real economy. Using a four-equation model which portrays the theoretical inter-linkages between real estate value and other components of the economy, our findings suggest that in the short run, negative real estate shocks affect GDP by dampening construction, bank lending activities and to a certain extent, consumption. The impact of shocks on investment is harder to decipher given the complicated dynamics arising from an almost instantaneous adjustment process towards equilibrium each time the system is perturbed. In the long run, there is no evidence of positive wealth effects on consumption while sustained depressions in property markets could be harmful to future economic growth.
    Keywords: Real estate shocks; Transmission channels; Macroeconomic performance
    JEL: C32 E20
    Date: 2008–06
  13. By: Rasyad A. Parinduri (Nottingham University Business School - Malaysia Campus); Shandre M. Thangavelu (Department of Economics, National University of Singapore)
    Abstract: We examine the e¤ect of the United States-Singapore Free Trade Agreement (FTA) on the value of frms listed in the Singapore Exchange using event study analysis. Despite the predictability of the FTA negotiation, we find that one event - the removal of the last obstacle to the free trade deal in January 2003 - increases the value of firms in some industries by 2-5%. These results may indicate that trade liberalization and FTAs do increase the value of firms.
    Date: 2009–04
  14. By: Hui-Boon Tan (Nottingham University Business School - Malaysia Campus); Siong-Hook Law (University Putra Malaysia - Department of Economics)
    Abstract: This study examines the dynamic effects of financial deepening on income distribution of 35 developing countries during the past two decades of 1980-2000. For this purpose, three existing alternative hypotheses concerning the finance-inequality nexus are tested based on the newly assembled measure of income distribution. The empirical results based on the dynamic panel data technique of General Method of Movement (GMM) suggest that financial deepening significantly reduces income inequality in developing countries. This evidence supports the hypothesis of inequality-narrowing in general. Nonetheless, income inequality responds differently to different financial factors. While the impact is significant from the banking sector, the equity market has no important role to play in this regard. The inverted U-shape finance-inequality relationship is not observed in these nations; instead, a U-shape relationship is detected. These results show that financial deepening reduces income inequality when the private sector credit of the country is below a threshold level. Countries with private sector credit higher than the threshold, on the other hand, will tend to experience a deterioration of their income inequality.
    Keywords: Financial deepening; Income inequality; Gini coefficient; Dynamic panel analysis; GMM
    JEL: E0 G0 O15
    Date: 2009–04

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