nep-sea New Economics Papers
on South East Asia
Issue of 2009‒09‒11
nine papers chosen by
Kavita Iyengar
Asian Development Bank

  1. What Is the Impact of the Global Financial Crisis on the Banking System in East Asia? By Michael Pomerleano
  2. Intervention index and exchange rate regimes: the cases of selected East-Asian economies By Pontines, Victor; Siregar, Reza
  3. The Real and Financial Implications of the Global Saving Glut: A Three-Country Model By Jean-Baptiste Gossé
  4. Export and Import Cointegration in Forestry Domain: The Case of Malaysia By F.A., Emmy; A.H., Baharom; Radam, Alias; I., Illisriyani
  5. The impact of the global financial crisis on business cycles in Asian emerging economies By Korhonen, Iikka; Fidrmuc , Jarko
  6. Asset prices, Credit and Investment in Emerging Markets By Tuomas A. Peltonen; Ricardo M. Sousa; Isabel S. Vansteenkiste
  7. Definitional and Statistical Issues Relating to Workers in Informal Employment By Sheila Bhalla
  8. Structural Change and Counterfactual Inflation-Targeting in Hong Kong By Paul D. McNelis
  9. Strategic Group Formation in the Mekong Delta: The Development of a Modern Hydraulic Society By Evers, Hans-Dieter; Benedikter, Simon

  1. By: Michael Pomerleano
    Abstract: This paper assesses the condition and outlook of the financial sectors—in particular, the banking sector—in the East Asia region in the aftermath of the current global financial crisis. The risks in the banking systems in East Asia are analyzed using the standard supervisory framework, which assesses capital adequacy, asset quality, management, earnings, and liquidity (CAMEL). [WP 146].
    Keywords: financial sectors, banking sector, banking, financial, East Asia, Asia, banking system, capital, capital adequacy, asset, management, earnings, liquidity, CAMEL, global financial crisis, Thailand, exchange rate, lonas, Japan,
    Date: 2009
  2. By: Pontines, Victor; Siregar, Reza
    Abstract: Given the absence of publicly available information on foreign exchange intervention, we propose an index of central bank intervention in the exchange market to classify exchange rate regimes adopted by four East Asian economies. We revisit an old debate on whether these crisis-effected East Asia countries have indeed returned to their pre-1997 rigid exchange rate policies. If, instead, there had been evidences of a policy shift to a more flexible regime, was the move voluntary, or mainly due to high market pressures on the currency? Our findings clearly reject the “hollow middle” hypothesis.
    Keywords: Exchange Market Intervention; Exchange Rate Regimes; East Asian Countries
    JEL: F41 F31
    Date: 2009–01–15
  3. By: Jean-Baptiste Gossé (CEPN - Centre d'économie de l'Université de Paris Nord - CNRS : UMR7115 - Université Paris-Nord - Paris XIII)
    Abstract: The model presented in this paper has two objectives. First, it models global imbalances in a simple way while conserving real and - nancial approaches. This double approach is necessary because Global Imbalances are due to the conjunction of nancial and real phenomena: the increase in the price of commodities, the accumulation of foreign reserves by the Asian central banks, the limited absorption capacity of the OPEC countries, the insucient development of the Asian nancial system and the perception of better returns in the US. The second objective is to model the global saving glut hypothesis and to show its implications. We start with a model which consists of three identical countries and then we replicate the current pattern of global imbalances in introducing three asymmetries: a xed exchange rate between Asia and the United States, a limited absorption capacity in Asia and endogenous propensity to spend in the United States. In order to avoid the recession linked to the increase of their propensity to import, the United States increase their propensity to spend. This adjustment has a cost: (i) the Global Imbalances grow quickly with an increase of current account imbalances and net foreign assets in both the US and Asia ; (ii) the euro area supports an appreciation of its exchange rate which put it in a long depression.
    Keywords: International Macroeconomics, Global Imbalances, Balance of Payments, International Finance , Simulation and Forecast
    Date: 2009–08–26
  4. By: F.A., Emmy; A.H., Baharom; Radam, Alias; I., Illisriyani
    Abstract: This study was undertaken to explore the relationship between the export and import in the category of Forestry domain for Malaysia which includes sub domain (1)industrial roundwood; (2)wood pulp; (3)wood fuel; (4) paper and paper board; (5) sawn wood; (6) recovered paper and (7)wood base panel. Johansen (1991) cointegration method was employed and the period of the study covers monthly data from 1961 to 2007. The results clearly show that the export and import of forestry domain is highly cointegrated. Bi-directional granger causality could be detected based on VECM method. Imports seems to positively and significantly affect exports, both in the long run and short run, vice versa.
    Keywords: Johansen cointegration test; forestry trade; VECM
    JEL: F14
    Date: 2009–08–04
  5. By: Korhonen, Iikka (BOFIT); Fidrmuc , Jarko (BOFIT)
    Abstract: We analyze the transmission of global financial crisis to business cycles in China and India. The pattern of business cycles in emerging Asian economies generally displays a low degree of synchronization with the OECD countries, which is consistent with the decoupling hypothesis. By contrast, however, the current financial crisis has had a significant effect on economic developments in emerging Asian economies. Applying dynamic correlations, we find wide differences for different frequencies of cyclical development. More specifically, at business cycle frequencies, dynamic correlations are typically low or negative, but they are also influenced most by the global financial crisis. Finally, we find a significant link between trade ties and dynamic correlations of GDP growth rates in emerging Asian countries and OECD countries.
    Keywords: financial crisis; business cycles; decoupling; trade; dynamic correlation
    JEL: E32 F15 F41
    Date: 2009–08–04
  6. By: Tuomas A. Peltonen (European Central Bank); Ricardo M. Sousa (Universidade do Minho - NIPE); Isabel S. Vansteenkiste (European Central Bank)
    Abstract: We build a panel of 31 emerging economies to uncover the determinants of private investment growth in emerging markets. Using several econometric techniques and quarterly data for the period 1990:1-2008:3, we show that: (i) the GDP and the cost of capital are among the fundamental determinants of private investment; (ii) the equity price impacts positively and significantly on investment; (iii) financial factors (such as, credit and lending rate) play an important role on the dynamics of investment, in particular, for Asian and Latin American countries; (iv) investment growth exhibits substantial persistence and responds sluggishly to shocks; and (v) crises episodes magnify the negative response of investment.
    Keywords: investment, credit, asset prices, emerging markets.
    JEL: E22 E44 D24
    Date: 2009
  7. By: Sheila Bhalla
    Abstract: This paper based on Indian and international documents assesses existing definition, criteria and methodologies for estimating employment and income generated in the informal economy in India. [NCEUS WP NO 3].
    Keywords: employment, income, informal economy, India, informal, Indian, employment, Asia, Africa,
    Date: 2009
  8. By: Paul D. McNelis (Hong Kong Institute for Monetary Research, Fordham University)
    Abstract: This paper evaluates structural change and adjustment in Hong Kong with Bayesian estimation of a small open economy with a fixed exchange rate show little or no change in the structural parameters or volatility estimates of the structural shocks before and after the Asian crisis and the experience of deflation. Terms of trade shocks are the most important sources of volatility for inflation in both periods. A counterfactual simulation shows that the dispersion of consumption and inflation volatility may have slightly decreased with an inflation-targeting regime with no uncertainty, but interest-rate volatility would have increased by factors of 50 to 100 percent.
    Keywords: Bayesian Estimation, Structural Change, Inflation Targeting
    JEL: E62 F41
    Date: 2009–07
  9. By: Evers, Hans-Dieter; Benedikter, Simon
    Abstract: The lower Mekong Delta, one of the largest river deltas in Asia, is a landscape shaped by the waters of the Mekong River that flows, as last part of its long way from the Tibetan Plateau to the South Chinese Sea, through a dense river and canal network in the Southwest of Vietnam. People in this area are, traditionally, exposed to a water-shaped environment and have lived for generations in adaptation to their natural surrounding without much human interference into the complex natural hydraulic system of the delta. However, this has changed dramatically during recent decades when hydraulic management started to become a key issue for the development of the lower Mekong Delta constantly, in particular with respect to the agricultural sector, which is the backbone of the delta’s economy. After the Second Indochinese War ended in 1975 the delta started to shift from human adaption to human control, transforming itself into what Wittfogel has described as a hydraulic society. This was mainly due to the new socialist government’s policy of rapid agricultural extension and growing endeavours in hydraulic management for fostering irrigated rice production. By now, in many places of the delta hydraulic works such as additional canals, dykes and sluices have been set up, constructed for regulating water flows. Technical innovations in hydraulic management and agricultural production have not only had significant impact on the delta’s environment and ecology, but also have triggered social transformation, in particular the appearance of new social groups struggling for access to resources and power. This paper intends to analyzes recent trends of social development and water management in the Mekong Delta from a scientific approach that is based on two social theories, firstly “strategic group analysis”, and secondly selected core aspects of Wittfogel’s social theory of “hydraulic society”. By presenting recently collected data, it is illustrated how the Mekong Delta has been transformed into a modern hydraulic society, in which certain strategic groups emerged as a consequence of growing activities in hydraulic management and agricultural-based economic growth. More specifically, the paper aims to give an overview of strategic group development in the delta by putting a strong focus on the process of forming a state bureaucracy of hydraulic management and the appearance of hydraulic construction companies as its clients. The paper shows how the strategic alliance between both groups has increased the chances for mutually appropriating government funds spent on hydraulic works and how this has caused ecologically and socially far-reaching impacts for the Mekong Delta.
    Keywords: Vietnam; Mekong Delta; strategic groups; hydraulic society; social transformation and power; water management; hydraulic bureaucracy; economic development
    JEL: D74 A11
    Date: 2009–05–02

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