nep-sea New Economics Papers
on South East Asia
Issue of 2012‒04‒10
thirteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Inflation targeting in Korea, Indonesia, Thailand, and the Philippines : the impct on business cycle synchronization between each country and the world By Inoue, Takeshi; Toyoshima, Yuki; Hamori, Shigeyuki
  2. Influence of age of child on differencesinlife satisfaction ofmalesand females: A comparative study among East Asian countries By Eiji Yamamura; Antonio Rodriguez
  3. Estudio de las relaciones comerciales entre Colombia e Indonesia By Ana María Correa Díaz
  4. Financial Integration between China and Asia Pacific Trading Partners: Parities Evidence from the First- and Second-generation Panel Tests By Chan, Tze-Haw; Baharumshah, Ahmad Zubaidi
  5. Featuring Tax Education in Non-accounting Curriculum: Survey Evidence By Mohd Amran Mahat; Lai Ming Ling
  6. One Mandarin Benefits the Whole Clan: Hometown Infrastructure and Nepotism in an Autocracy By Kieu-Trang Nguyen; Quoc-Anh Do; Anh Tran
  7. Household coping and response to government stimulus in an economic crisis : evidence from Thailand By Khandker, Shahidur R.; Koolwal, Gayatri B.; Haughtonm Jonathan; Jitsuchon, Somchai
  8. Asymptotic Distributions of the Least Squares Estimator for Diffusion Processes By Qiankun Zhou; Jun Yu
  9. International Capital Flows with Limited Commitment and Incomplete Markets By Jurgen von Hagen; Haiping Zhang
  10. Coping and adaptation against decreasing fish resources : case study of fishermen in Lake Inle, Myanmar By Okamoto, Ikuko
  11. Financial Development and the Patterns of International Capital Flows By Jurgen von Hagen; Haiping Zhang
  12. International Capital Flows and Aggregate Output By Jurgen von Hagen; Haiping Zhang
  13. The People Want the Fall of the Regime": Schooling, Political Protest, and the Economy By Filipe R. Campante; Davin Chor

  1. By: Inoue, Takeshi; Toyoshima, Yuki; Hamori, Shigeyuki
    Abstract: This paper empirically analyzes whether and to what extent the adoption of inflation targeting (IT) in Korea, Indonesia, Thailand and the Philippines has affected their business cycle synchronization with the rest of the world. By employing the dynamic conditional correlation (DCC) model developed by Engle (2002), we find that IT in Asia has little effect on international business cycle synchronization and the effect is positive in some of the countries, if any. These findings basically seem to be consistent with the evidence from relevant literature.
    Keywords: Southeast Asia, Indonesia, Thailand, Philippines, South Korea, Inflation, Business cycles, Asia, Business cycle synchronization, DCC, Inflation targeting
    JEL: E31 E32 E52 E58 F42 F44
    Date: 2012–03
  2. By: Eiji Yamamura (Seinan Gakuin University, Japan); Antonio Rodriguez (Al Akhawayn University, Morocco)
    Abstract: Using individual-level data for China,South Korea, and Japan for2006, this research examines how life satisfaction for married males and femalesin East Asian countries isinfluenced bythe age of theirchildren. Our results show that the life satisfaction of males is barely affected by a child of the relationship, whereas the life satisfaction of females with a young child is lower than that of females who do not have a child. This result holds for countries at different development stages. There is also a gender differential regarding the effect of young children on life satisfaction. Furthermore, the more developed the country, the greater this difference becomes.
    Keywords: Life satisfaction, child, East Asian countries, Ordered probit
    JEL: D19 J13 J16
    Date: 2012–04
  3. By: Ana María Correa Díaz
    Abstract: El presente artículo muestra como el gobierno de Colombia se ha enfocado recientemente en aproximarse a las naciones asiáticas debido a su potencial de rápido crecimiento en materia de comercio, inversión y ciencia y tecnología. A través de la información adquirida por entrevistas con embajadores asiáticos en Colombia se resalta particularmente a La República de Indonesia, como un socio potencial de negocios para el país, por sus más de 20 años de relaciones diplomáticas, y por ser un puente hacia las demás economías asiáticas pertenecientes al grupo de los civets, al Foro de Cooperación Económica Asia-Pacífico, a La Asociación de Naciones del Sudeste Asiático y al Grupo de los Veinte. Así, el objetivo de la presente reflexión es profundizar en los beneficios para el exportador colombiano de establecer negociaciones con este país en materia de alianzas productivas, ampliación de mercados, y relaciones comerciales.
    Date: 2011–11–30
  4. By: Chan, Tze-Haw; Baharumshah, Ahmad Zubaidi
    Abstract: This paper presents a joint investigation of the international parity conditions between China and her 13 major trading partners in the Asia Pacific over globalization era. Several advanced tests of unit root for univariate and panel series are utilized in the analyses. Our findings reveal that first, RIP holds stronger than PPP among APEC-China. Second, both parities tend to hold better as one move to the recent years, attributed not only to the financial liberalization process among APEC economies, but also to the Chinese trade policy and the regional commitment for the ASEAN+3+2+1 cooperation. Third, China and APEC have improved the ability to absorb regional shocks as indicated by the shortened half-life reported over time, especially when the post-Asia crisis era is included.
    Keywords: PPP; RIP; Panel Unit Root Tests; Mean Reversion; Half-life; Financial Integration
    JEL: G15 C33 F36
    Date: 2012–03
  5. By: Mohd Amran Mahat; Lai Ming Ling
    Abstract: Purpose –This paper aimed (i) to solicit undergraduates‟ opinions on tax education, and (ii) to identify undergraduates‟ preferences on taxation topics. Design/methodology/approach – The paper used a survey to collect data. Survey questionnaires were personally administered on 575 undergraduates from accounting and non-accounting faculties in one of the public universities in Malaysia. Findings – The findings revealed that more than 90% of the respondents perceived that tax education is important and relevant, and should be introduced at the undergraduate levels. The survey also found that „Personal Taxation‟ and „Tax Planning for Individuals‟ were the two most preferred tax topics that undergraduates wished to learn. Originality/value – The paper support the call to introduce tax education into non-accounting curriculum in disseminating tax knowledge for better tax compliance among future taxpayers. --
    Keywords: Tax education,Non-accounting curriculum,Undergraduates,Malaysia
    Date: 2011
  6. By: Kieu-Trang Nguyen (Indiana University Bloomington); Quoc-Anh Do (Singapore Management University); Anh Tran (Indiana University Bloomington)
    Abstract: This paper studies nepotism by government officials in an authoritarian regime. We collect a unique dataset of political promotions of officials in Vietnam and estimate their impact on public infrastructure in their hometowns. We find strong positive effects on several outcomes, some with lags, including roads to villages, marketplaces, clean water access, preschools, irrigation, and local radio broadcasters, as well as the hometown’s propensity to benefit from the State’s “poor commune support program”. Nepotism is not limited to only top-level officials, pervasive even among those without direct authority over hometown budgets, stronger when the hometown chairperson’s and promoted official’s ages are closer, and where provincial leadership has more discretionary power in shaping policies, suggesting that nepotism works through informal channels based on specific political power and environment. Contrary to pork barrel politics in democratic parliaments, members of the Vietnamese legislative body have little influence on infrastructure investments for their hometowns. Given the top-down nature of political promotions, officials arguably do not help their tiny communes in exchange for political support. Consistent with that, officials favor only their home commune and ignore their home district, which could offer larger political support. These findings suggest that nepotism is motivated by officials’ social preferences directed towards their related circles, and signals an additional form of corruption that may prevail in developing countries with low transparency.
    Keywords: nepotism, infrastructure construction, official’s hometown, political connection, political promotion, social preference, directed altruism.
    JEL: O12 H54 H72 D72 D64
    Date: 2012–01
  7. By: Khandker, Shahidur R.; Koolwal, Gayatri B.; Haughtonm Jonathan; Jitsuchon, Somchai
    Abstract: The crash of global financial markets in 2008 caused a ripple effect on economic demand and growth worldwide. Export-oriented economies were hit particularly hard, and many governments stepped in quickly with broad-ranging stimulus programs to lessen the effects on households of rising unemployment and falling income. To better understand the role that stimulus policy might play in softening the effects of these shocks, this paper examines recent nationally-representative data from Thailand, an export-dependent economy where a large-scale stimulus program was introduced in 2009. Using monthly data spanning 2006-2010, the paper uses sub-province-level community panel data to examine the effects of major components of the stimulus on household consumption, income, borrowing, and debt repaid. To address simultaneity of changes in government spending and household outcomes, the analysis estimates a dynamic panel regression, instrumenting the stimulus effect with second-order lagged outcome variables, and estimating the model using the Generalized Method of Moments. The results suggest that household participation in these programs helped smooth consumption. This increase in monthly consumption was not supported from household receipts from the government stimulus, but more likely through a reallocation of consumption and savings that included greater debt repayment. The paper typically finds stronger effects in urban compared with rural areas.
    Keywords: Economic Theory&Research,Emerging Markets,Rural Poverty Reduction,Climate Change Economics,Debt Markets
    Date: 2012–03–01
  8. By: Qiankun Zhou (School of Economics, Singapore Management University); Jun Yu (Sim Kee Boon Institute for Financial Economics, School of Economics and Lee Kong Chian School of Business)
    Abstract: The asymptotic distributions of the least squares estimator of the mean reversion parameter (κ) are developed in a general class of diffusion models under three sampling schemes, namely, longspan, in-fill and the combination of long-span and in-fill. The models have an affine structure in the drift function, but allow for nonlinearity in the diffusion function. The limiting distributions are quite different under the alternative sampling schemes. In particular, the in-fill limiting distribution is non-standard and depends on the initial condition and the time span whereas the other two are Gaussian. Moreover, while the other two distributions are discontinuous at κ = 0, the in-fill distribution is continuous in κ. This property provides an answer to the Bayesian criticism to the unit root asymptotics. Monte Carlo simulations suggest that the in-fill asymptotic distribution provides a more accurate approximation to the finite sample distribution than the other two distributions in empirically realistic settings. The empirical application using the U.S. Federal fund rates highlights the difference in statistical inference based on the alternative asymptotic distributions and suggests strong evidence of a unit root in the data.
    Keywords: Vasicek Model, One-factor Model, Mean Reversion, In-fill Asymptotics, Long-span Asymptotics, Unit Root Test
    JEL: C12 C22 G12
    Date: 2012–01
  9. By: Jurgen von Hagen (University of Bonn, Indiana University and CEPR); Haiping Zhang (School of Economics, Singapore Management University)
    Abstract: Recent literature has proposed two alternative types of financial frictions, i.e., limited commitment and incomplete markets, to explain the patterns of international capital flows between developed and developing countries observed in the past two decades. This paper integrates both types of frictions into a two-country overlapping-generations framework to facilitate a direct comparison of their effects. In our model, limited commitment distorts the investment made by agents with different productivity, which creates a wedge between the interest rates on equity capital vs. credit capital; while incomplete markets distort the investment among projects with different riskiness, which creates a wedge between the risk-free rate and the mean rate of return to risky capital. We show that the two approaches are observationally equivalent with respect to their implications for international capital flows, production efficiency, and aggregate output.
    Keywords: E44, F41
    Date: 2012–01
  10. By: Okamoto, Ikuko
    Abstract: Fishermen depend on Lake Inle in Myanmar for their livelihood. However, the lake has been undergoing environmental degradation over the years. Adding to the long-term decrease in the catch because of this degradation, these fishermen faced extremely low water levels in 2010, which they had previously not experienced. Based on field surveys, this paper aims to reveal how fishermen adapted and coped with the changing environment as well as the sudden shock of the abnormally low water levels.
    Keywords: Fisheries, Environmental problems, Myanmar, Coping, Adaptation, Resource, Fishermen
    JEL: Q13 Q2 Q22
    Date: 2012–03
  11. By: Jurgen von Hagen (University of Bonn, Indiana University and CEPR); Haiping Zhang (School of Economics, Singapore Management University)
    Abstract: We develop a tractable two-country overlapping-generations model and show that cross-country differences in financial development can explain three recent empirical patterns of international capital flows: Financial capital flows from relatively poor to relatively rich countries while foreign direct investment fl ows in the opposite direction; net capital flows go from poor to rich countries; despite of its negative net international investment positions, the United States receives a positive net investment income. We also explore the welfare and distributional effects of international capital fl ows and show that the patterns of capital fl ows may reverse along the convergence process of a developing country.
    Keywords: Capital account liberalization, financial development, foreign direct investment, symmetry breaking
    JEL: E44 F41
    Date: 2011–12
  12. By: Jurgen von Hagen (University of Bonn, Indiana University and CEPR); Haiping Zhang (School of Economics, Singapore Management University)
    Abstract: We show in a tractable, multi-country OLG model that cross-country differences in financial development explain three recent empirical patterns of international capital fl ows. International capital mobility affects output in each country directly through the size of domestic investment as well as indirectly through the composition of domestic investment and the level of domestic savings. In contrast to earlier literature, our model admits the possibility that the indirect effects dominate the direct effects and international capital mobility raises output in the poor country and globally, although net capital flows are in the direction of the rich country. Our model adds to the understanding of the benefits of international capital mobility in the presence of financial frictions.
    Keywords: financial frictions, financial development, foreign direct investment
    JEL: E44 F41
    Date: 2011–12
  13. By: Filipe R. Campante (Harvard Kennedy School, Harvard University); Davin Chor (School of Economics, Singapore Management University)
    Abstract: We examine several hypotheses regarding the determinants and implications of political protest, motivated by the wave of popular uprisings in Arab countries starting in late 2010. We draw attention to one of the most fundamental correlates of political activity identied in the literature, namely education, and its interaction with economic circumstances. Using a combination of individual-level micro data and cross-country macro data, we highlight how rising levels of education coupled with economic under-performance display a strong link with participation in protest modes of political activity as well as incumbent turnover. Political protests are thus more likely when an increasingly educated populace does not have commensurate economic gains. We also nd that the implied political instability is associated with heightened pressures towards democratization.
    Keywords: Education; Human capital; Political protest; Demonstrations; Economic under-performance; Democratization.
    JEL: D72 D78 I20 I21 O15
    Date: 2012–01

This nep-sea issue is ©2012 by Kavita Iyengar. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.