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on South East Asia |
| By: | KAWASAKI Kentaro |
| Abstract: | After the global financial crisis, it has become more recognized that the policy dialogues among both emerging and advanced economies on the exchange rate is necessary to prevent competitive devaluation. In this context, East Asian countries should also choose an adequate exchange rate system. However, there still exists a variety of exchange rate regimes in this area, which might suggest a possibility of coordination failure. To avoid this, the establishment of stable exchange rate linkages and the enhancement of monetary policy credibility in East Asia are needed. These discussions on common regional exchange rate policy are often related to the "Optimum Currency Area (OCA) theory" because stabilized exchange rates in the global economies are only assured by a "one size fits all" monetary policy in the end. Hence, the main purpose of this paper is to investigate whether East Asian countries—ASEAN5, China, Korea, and Japan—have developed into matching an OCA in recent years or not. While developing the earlier generalized purchasing power parity (G-PPP) model into an up-to-date non-linear econometric model and considering the adoption of the Asian monetary unit (AMU) into this area, this paper could have positive empirical results which suggest for forming a common currency in East Asia. |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:12032&r=sea |
| By: | Jean-Pierre Allegret (EconomiX - CNRS : UMR7166 - Université Paris X - Paris Ouest Nanterre La Défense); Cécile Couharde (EconomiX - CNRS : UMR7166 - Université Paris X - Paris Ouest Nanterre La Défense); Cyriac Guillaumin (CREG - Centre de recherche en économie de Grenoble - Université Pierre Mendès-France - Grenoble II : EA4625) |
| Abstract: | In this paper, we examine the relative importance of external shocks in domestic fluctuations of East Asian countries and check if these shocks lead to asymmetric or symmetric reactions between the considered economies. To this end, we estimate, over the period 1990.1-2010.4, a structural VAR model with block exogeneity (SVARX model) relying on a comprehensive set of external shocks. We firstly document a risingimpact of these external shocks on domestic variables since the mid 1990s. Finally, real oil price and U.S. GDP shocks have a significant impact on domestic activity and lead to more symmetric responses, compared to U.S. monetary shock and MSCI Index financial shocks. |
| Keywords: | external shocks ; financial crisis ; SVARX model ; East Asia |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00697310&r=sea |
| By: | Thomas Barré (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne, ERUDITE - Equipe de Recherche sur l'Utilisation des Données Individuelles Temporelles en Economie - Université Paris XII - Paris Est Créteil Val-de-Marne : EA437 - Université Paris Est Marne-la-Vallée) |
| Abstract: | Uncertainty is a crucial issue for producers who must make input decisions without knowing prices and without perfect knowledge of realized output. In this context, price expectations strongly determine the production choices and market prices that result from market-clearing conditions. This study analyzed the role that price expectations play in price dynamics, developing a theoretical model of trade in varieties following Armington (1969) and augmented with yield and price uncertainty to highlight several main determinants of domestic producer prices, including exchange rates, proximity to world markets, input prices, natural disasters, and producers' expectations. An econometric estimation of the rice sector, using a panel of 13 developing Asian countries during 1965-2003, confirmed that expectations count, with a 1% increase in the expected price resulting in a 1.18% decrease in the market price. A simulation exercise based on these empirical results demonstrated that forecasting errors are large. Specifically, Asian rice farmers have a 50% chance of making prediction errors of 10% or more on the final market price. This high error rate suggests the need for developing ways of sharing information, such as radio programs dedicated to agricultural producers or the introduction of futures markets, to stabilize agricultural incomes. |
| Keywords: | Rice ; Asia ; price dynamics ; price expectations ; |
| Date: | 2011–10–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00630711&r=sea |
| By: | Chan, Tze-Haw |
| Abstract: | We construct a structural system that jointly examines Purchasing Power and Interest Parity conditions for Malaysia-China during 1996Q1-2010Q4. Structural VARX, VECMX, over-identifying restrictions, bootstrapping and persistent profiles are utilized in the analyses. We find support for interaction between the goods and capital markets of Malaysia-China, when Asia crisis and subprime crisis are taken into accounts. The faster pace of adjustment towards price instead of interest equilibrium implies the non-appearance of sequencing problem in economic integration. Nevertheless, it is of concern that maintaining a rigid foreign exchange with major trading partner could be costly with potentially contagious price instability and financial risk. |
| Keywords: | International Parity Conditions; Economic Integration; Transmission Mechanism; VARX; VECMX |
| JEL: | F42 C51 F36 |
| Date: | 2012–05–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:38930&r=sea |
| By: | Michelle Rendall |
| Abstract: | This paper examines the evolution of female labor market outcomes from 1987 to 2008 by assessing the role of changing labor demand requirements in four developing countries: Brazil, Mexico, India and Thailand. The results highlight the importance of structural change in reducing gender disparities by decreasing the labor demand for physical attributes. The results show that India, the country with the greatest physical labor requirements, exhibits the largest labor market gender inequality. In contrast, Brazil's labor requirements have followed a similar trend seen in the United States, reducing gender inequality in both wages and labor force participation. |
| Keywords: | Structural change, job tasks, female employment, wage gap, Latin America, Asia |
| JEL: | J20 J23 J24 J31 O31 O33 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:077&r=sea |
| By: | William R. Cline (Peterson Institute for International Economics); John Williamson (Peterson Institute for International Economics) |
| Abstract: | Cline and Williamson calculate a new set of fundamental equilibrium exchange rates (FEERs) based on the new round of International Monetary Fund (IMF) projections in the spring 2012 World Economic Outlook. These show that on a trade-weighted basis the US dollar is now overvalued by 3–4 percent, while the Chinese renminbi is undervalued 3–4 percent. Both misalignments are much lower than in previous years (6 percent overvaluation and 16 percent undervaluation respectively a year ago). Because of the large roles of China and the United States in global imbalances, the GDP-weighted absolute value of divergence from FEERs has fallen from 8.4 percent in 2009 to 2.6 percentage points in April 2012. In contrast, large imbalances and misalignments have persisted in a number of smaller economies, including Australia, New Zealand, South Africa, and Turkey on the deficit side and Hong Kong, Malaysia, Singapore, Sweden, Switzerland, and Taiwan on the surplus side. |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:iie:pbrief:pb12-14&r=sea |
| By: | Lionel Fontagné (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne); Michela Limardi (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA) |
| Abstract: | Many Developing Countries ratified ILO Fundamental Conventions and authorized local labour unions. Multinational companies producing in these countries pay more when NGOs campaigns take place and reputation counts. However, whether this external pressure from NGOs benefit local workers outside MNEs affiliates in host countries remains an open issue. Segmented and weak local labour unions often rely on external funding from the North and technical assistance by labour NGOs. They need to increase their visibility in the labour intensive sectors targeted by Northern donations and activism. To address these issues we develop a bargaining model adapted to peculiarities of labour market institutions in developing countries, i.e. external funding and the complementarity with labour NGOs. This model is estimated on data on Indonesian manufacturing firms, before and after the authorisation of labour unions, in sensitive and non sensitive sectors. We find that, in sectors with visibility for labour unions, the net outcome on wages of the presence of NGOs is negative. The external fundings imply a distortion in the objective of labour unions, confronted with the constraint of increasing the employment in the formal sector. |
| Keywords: | Labour standards ; NGOs ; Wage determination |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00630096&r=sea |
| By: | Rodrik, Dani |
| Abstract: | Novelists have a better track record than economists at foretelling the future. Consider then Gary Shteyngart’s timely comic novel “Super Sad True Love Story†(Random House, 2010), which provides a rather graphic vision of what lies in store for the world economy. The novel takes place in the near future and is set against the backdrop of a United States that lies in economic and political ruin. The country’s bankrupt economy is ruled with a firm hand by the IMF from its new Parthenon-shaped headquarters in Singapore. China and sovereign wealth funds have parceled America’s most desirable real estate among themselves. Poor people are designated as LNWI (“low net worth individualsâ€) and are being pushed into ghettoes. Even skilled Americans are desperate to acquire residency status in foreign lands. This is sheer fantasy of course, but one that seems to resonate well with the collective mood. A future in which the U.S and other advanced economies are forced to play second fiddle to the dynamic emerging economies in Asia and elsewhere is rapidly becoming cliché. This vision is based in part on the very rapid pace of economic growth that emerging and developing economies experienced in the run-up to the global financial crisis of 2008-2009. Latin America benefited from a pace of economic development that it had not experienced since the 1970s, and Africa began to close the gap with the advanced countries for the first time since countries in the continent received their independence. Even though most of these countries were hit badly by the crisis, their recovery has also been swift. Optimism on developing countries is matched by pessimism on the rich country front. The United States and Europe have emerged from the crisis with debilitating challenges. They need to address a crushing debt burden and its unpleasant implications for fiscal and monetary policy. They also need to replace growth models which were based in many instances on finance, real estate, and unsustainable levels of borrowing. Japan has long ceased to exhibit any growth dynamism. And the eurozone’s future remains highly uncertain -- with the economic and political ramifications of its unraveling looking nothing less than scary. In such an environment, rapid growth in the developing world is the only thing that could propel the world economy forward and generate increasing demand for rich-country goods and services – the only silver lining in an otherwise dreary future. The question I address in this paper is whether this gap in performance between the developed and developing worlds can continue, and in particular, whether developing nations can sustain the rapid growth they have experienced of late. I will not have anything to say on the prospects for the advanced economies themselves, assuming, along with conventional wisdom, that their growth will remain sluggish at best. My focus is squarely on the developing and emerging countries and on the likelihood of continued convergence. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:hrv:hksfac:5131504&r=sea |
| By: | Quoc-Anh Do (School of Economics, Singapore Management University); Yen-Teik Lee (Department of Finance, Lee Kong Chian School of Business, Singapore Management University); Bang Dang Nguyen (Finance and Accounting Group, Judge Business School, University of Cambridge); Kieu-Trang Nguyen (SPEA, Indiana University) |
| Abstract: | This paper investigates the impact of social-network based political connections on firm value. We focus on the networks of university classmates and alumni among directors of U.S. public firms and congressmen. Comparing firms connected to elected versus defeated politicians in the Regression Discontinuity Design of close elections from 2000 to 2008, we provide evidence that political connections enhance firm value. However, the value of political connections varies in a more complex way than expected. While connections to powerful members of the Senate generate strong positive impact on firm value, connections to newly elected congressmen are less valuable to firms than connections to state-level politicians defeated in those elections. As a result, a director’s connection to an elected congressman causes a Weighted Average Treatment Effect on Cumulative Abnormal Returns of -2.65% surrounding the election date. Our results are robust and consistent through various specifications, parametric and nonparametric, with different outcome measures and social network definitions, and across many subsamples. Overall, our study identifies the value of political connections through social networks, uncovers its variation across different politicians’ backgrounds, and stresses the importance of state-level political connections. |
| Keywords: | Corruption; Accountability; Population Concentration; Capital Cities; US State Politics; Media; Turnout; Campaign Contributions; Public Good Provision |
| JEL: | D72 D73 L82 R12 R50 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:siu:wpaper:22-2012&r=sea |
| By: | Ken Yamada (School of Economics, Singapore Management University) |
| Abstract: | This paper studies a life-cycle model of home production to examine how married women change their allocation of time in response to evolutionary movements along the life-cycle wage profile in Japan. After accounting for the potential bias due to heterogeneity, measurement error, weak instruments, and missing data, the estimates of intertemporal substitution elasticity obtained from the home production model are moderate and similar to those obtained from the standard labor supply model. |
| Keywords: | labor supply, home production, intertemporal substitution |
| JEL: | J22 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:siu:wpaper:24-2012&r=sea |
| By: | Ken Yamada (School of Economics, Singapore Management University) |
| Abstract: | There has been increasing concern about the influence of elements of family background on children’s future outcomes in Japan. This paper empirically examines the long-term impact of family background, including sibling composition and parental attributes, and reveals how these elements of Japanese women’s family backgrounds affect their educational attainment and investment, labor market outcomes, family formation, and spousal characteristics. |
| Keywords: | sibling composition, family background, intergenerational correlations, family formation, assortative mating |
| JEL: | J12 J13 J24 J31 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:siu:wpaper:23-2012&r=sea |
| By: | Powdthavee, Nattavudh (London School of Economics); Riyanto, Yohanes E. (Nanyang Technological University, Singapore) |
| Abstract: | We investigated experimentally whether people can be induced to believe in a non-existent expert, and subsequently pay for what can only be described as transparently useless advice about future chance events. Consistent with the theoretical predictions made by Rabin (2002) and Rabin and Vayanos (2010), we show empirically that the answer is yes and that the size of the error made systematically by people is large. |
| Keywords: | gambler's fallacy, hot-hand, random streak, expertise, information |
| JEL: | C91 D03 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6557&r=sea |
| By: | Heejoon Han (National University of Singapore); Dennis Kristensen (University College London and CREATES) |
| Abstract: | This paper investigates the asymptotic properties of the Gaussian quasi-maximum-likelihood estimators (QMLE?s) of the GARCH model augmented by including an additional explanatory variable - the so-called GARCH-X model. The additional covariate is allowed to exhibit any degree of persistence as captured by its long-memory parameter dx; in particular, we allow for both stationary and non-stationary covariates. We show that the QMLE'?s of the regression coefficients entering the volatility equation are consistent and normally distributed in large samples independently of the degree of persistence. This implies that standard inferential tools, such as t-statistics, do not have to be adjusted to the level of persistence. On the other hand, the intercept in the volatility equation is not identifi?ed when the covariate is non-stationary which is akin to the results of Jensen and Rahbek (2004, Econometric Theory 20) who develop similar results for the pure GARCH model with explosive volatility. |
| Keywords: | GARCH; Persistent covariate; Fractional integration; Quasi-maximum likelihood estimator; Asymptotic distribution theory. |
| JEL: | C22 C50 G12 |
| Date: | 2012–05–18 |
| URL: | http://d.repec.org/n?u=RePEc:aah:create:2012-25&r=sea |