nep-sea New Economics Papers
on South East Asia
Issue of 2013‒01‒26
eleven papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Financing Japan’s World War II occupation of Southeast Asia By Gregg Huff; Shinobu Majima
  2. World human development : 1870-2007 By Leandro Prados de la Escosura
  3. Multiscale Adaptive Inference on Conditional Moment Inequalities By Timothy B. Armstrong; Hock Peng Chan
  4. Providing easy access to cross-country comparative contextual data for demographic research: concept and recent advances of the Generations & Gender Programme Contextual Database By Arianna Caporali; Sebastian Klüsener; Gerda R. Neyer; Sandra Krapf; Olga Grigorieva
  5. A Non-Parametric and Entropy Based Analysis of the Relationship between the VIX and S&P 500 By David E. Allen; Michael McAleer; Robert Powell; Abhay K. Singh
  6. Recent Developments in Financial Economics and Econometrics: An Overview By Chia-Lin Chang; David Allen; Michael McAleer
  7. Asia and The G20 By Peter Drysdale; Sébastien Willis
  8. Taking ASEAN+1 FTAs towards the RCEP: A Mapping Study By Yoshifumi Fukunaga; Ikumo Isono
  9. The Economic Integration of ASEAN+3 By Verico, Kiki
  10. Minimum Wage in a Deflationary Economy: The Japanese Experience, 1994–2003 By Ryo Kambayashi; Daiji Kawaguchi; Ken Yamada
  11. Grandparents as Guards: A Game Theoretic Analysis of Inheritance and Post Marital Residence in a World of Uncertain Paternity By Brishti Guha

  1. By: Gregg Huff (Pembroke College, University of Oxford); Shinobu Majima (Faculty of Economics, Gakushuin University)
    Abstract: This paper analyzes how Japan financed its World War II occupation of Southeast Asia, the transfer of resources to Japan, and the monetary and inflation consequences of Japanese policies. In Malaya, Burma, Indonesia and the Philippines, the issue of military scrip to pay for resources and occupying armies greatly increased money supply. Despite high inflation, hyperinflation hardly occurred because of a sustained transactions demand for money, because of Japan's strong enforcement of monetary monopoly, and because of declining Japanese military capability to ship resources home. In Thailand and Indochina, occupation costs and bilateral clearing arrangements created near open-ended Japanese purchasing power and allowed the transfer to Japan of as much as a third of Indochina's annual GDP. Although the Thai and Indochinese governments financed Japanese demands mainly by printing large quantities of money, inflation rose only in line with monetary expansion due to money's continued use as a store of value in rice-surplus areas.
    Keywords: War, Financial and macroeconomic crises, Resource transfer, Occupation costs, Bilateral clearing arrangements, Seigniorage, Hyperinflation, Greater East Asian Co-Prosperity Sphere, Japan, Southeast Asia
    JEL: G01 N15 N45 P44
    Date: 2013–01–16
  2. By: Leandro Prados de la Escosura
    Abstract: How has wellbeing evolved over time and across regions? How does the West compare to the Rest? What explains their differences? These questions are addressed using an historical index of human development. A sustained improvement in wellbeing has taken place since 1870. The absolute gap between OECD and the Rest widened over time, but an incomplete catching up –largely explained by education- has occurred since 1913 but fading away after 1970, when the Rest fell behind the OECD in terms of longevity. As the health transition was achieved in the Rest, the contribution of life expectancy to human development improvement declined. Meanwhile, in the OECD, as longevity increased, healthy years expanded. A large variance in human development is noticeable in the Rest since 1970, with East Asia, Latin America and North Africa catching up to the OECD, while Central and Eastern Europe and Sub-Saharan Africa falling behind
    Keywords: Wellbeing, Human Development, HDI, Life Expectancy, Education
    JEL: O15 O50 I00 N30
    Date: 2013–01
  3. By: Timothy B. Armstrong (Cowles Foundation, Yale University); Hock Peng Chan (National University of Singapore)
    Abstract: This paper considers inference for conditional moment inequality models using a multiscale statistic. We derive the asymptotic distribution of this test statistic and use the result to propose feasible critical values that have a simple analytic formula. We also propose critical values based on a modified bootstrap procedure and prove their asymptotic validity. The asymptotic distribution is extreme value, and the proof uses new techniques to overcome several technical obstacles. We provide power results that show that our test detects local alternatives that approach the identified set at the best possible rate under a set of conditions that hold generically in the set identified case in a broad class of models, and that our test is adaptive to the smoothness properties of the data generating process. Our results also have implications for the use of moment selection procedures in this setting. We provide a monte carlo study and an empirical illustration to inference in a regression model with endogenously censored and missing data.
    Keywords: Moment inequalities, Set inference, Adaptive inference
    JEL: C01 C14 C34
    Date: 2013–01
  4. By: Arianna Caporali (Max Planck Institute for Demographic Research, Rostock, Germany); Sebastian Klüsener (Max Planck Institute for Demographic Research, Rostock, Germany); Gerda R. Neyer (Max Planck Institute for Demographic Research, Rostock, Germany); Sandra Krapf (Max Planck Institute for Demographic Research, Rostock, Germany); Olga Grigorieva (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Demographic behaviour is shaped not only by characteristics at the individual level, but also by the context in which individuals are embedded. The Contextual Database of the Generations and Gender Programme (GGP) supports research on these micro-macro links by providing cross-country comparative contextual data on demographic, socio-economic, and policy developments covering up to 60 countries in Europe, North America, Asia, and Oceania. This paper presents conceptual considerations and recent advances in the implementation of this database. Although conceptually linked to the Generations and Gender Survey, the GGP Contextual Database can also be used for the analysis of data from other surveys or to study macro-developments. With its unique combination of features, this database could serve as a model for the development of contextual databases linked to other surveys. These features include the provision of harmonised national and sub-national regional time series of indicators in a dynamic web environment with innovative functionalities, such as metadata documentation by single data entry and automatic geocoding.
    Keywords: Europe, data banks, fertility, gender, generations
    JEL: J1 Z0
    Date: 2013–01
  5. By: David E. Allen (Edith Cowan University); Michael McAleer (Erasmus University Rotterdam, Complutense University of Madrid, Spain, and Kyoto University, Japan); Robert Powell (Edith Cowan University); Abhay K. Singh (Edith Cowan University)
    Abstract: This paper features an analysis of the relationship between the S&P 500 Index and the VIX using daily data obtained from both the CBOE website and SIRCA (The Securities Industry Research Centre of the Asia Pacic). We explore the relationship between the S&P 500 daily continuously compounded return series and a similar series for the VIX in terms of a long sample drawn from the CBOE running from 1990 to mid 2011 and a set of returns from SIRCA's TRTH datasets running from March 2005 to-date. We divide this shorter sample, which captures the behaviour of the new VIX, introduced in 2003, into four roughly equivalent sub-samples which permit the exploration of the impact of the Global Financial Crisis. We apply to our data sets a series of non-parametric based tests utilising entropy based metrics. These suggest that the PDFs and CDFs of these two return distributions change shape in various subsample periods. The entropy and MI statistics suggest that the degree of uncertainty attached to these distributions changes through time and using the S&P 500 return as the dependent variable, that the amount of information obtained from the VIX also changes with time and reaches a relative maximum in the most recent period from 2011 to 2012. The entropy based non-parametric tests of the equivalence of the two distributions and their symmetry all strongly reject their respective nulls. The results suggest that parametric techniques do not adequately capture the complexities displayed in the behaviour of these series. This has practical implications for hedging utilising derivatives written on the VIX, which will be the focus of a subsequent study.
    Keywords: S&P 500; VIX; Entropy; Non-Parametric Estimation; Quantile Regressions
    JEL: C14 C22 G24 G32
    Date: 2013–01–17
  6. By: Chia-Lin Chang (National Chung Hsing University, Taiwan); David Allen (Edith Cowan University, Australia); Michael McAleer (Erasmus University Rotterdam, Complutense University of Madrid, Spain; Kyoto University, Japan)
    Abstract: Research papers in empirical finance and financial econometrics are among the most widely cited, downloaded and viewed articles in the discipline of Finance. The special issue presents several papers by leading scholars in the field on “Recent Developments in Financial Economics and Econometrics”. The breadth of coverage is substantial, and includes original research and comprehensive review papers on theoretical, empirical and numerical topics in Financial Economics and Econometrics by leading researchers in finance, financial economics, financial econometrics and financial statistics. The purpose of this special issue on “Recent Developments in Financial Economics and Econometrics” is to highlight several novel and significant developments in financial economics and financial econometrics, specifically dynamic price integration in the global gold market, a conditional single index model with local covariates for detecting and evaluating active management, whether the Basel Accord has improved risk management during the global financial crisis, the role of banking regulation in an economy under credit risk and liquidity shock, separating information maximum likelihood estimation of the integrated volatility and covariance with micro-market noise, stress testing correlation matrices for risk management, whether bank relationship matters for corporate risk taking, with evidence from listed firms in Taiwan, pricing options on stocks denominated in different currencies, with theory and illustrations, EVT and tail-risk modelling, with evidence from market indices and volatility series, the economics of data using simple model free volatility in a high frequency world, arbitrage-free implied volatility surfaces for options on single stock futures, the non-uniform pricing effect of employee stock options using quantile regression, nonlinear dynamics and recurrence plots for detecting financial crisis, how news sentiment impacts asset volatility, with evidence from long memory and regime-switching approaches, quantitative evaluation of contingent capital and its applications, high quantiles estimation with Quasi-PORT and DPOT, with an application to value-at-risk for financial variables, evaluating inflation targeting based on the distribution of inflation and inflation volatility, the size effects of volatility spillovers for firm performance and exchange rates in tourism, forecasting volatility with the realized range in the presence of noise and non-trading, using CARRX models to study factors affecting the volatilities of Asian equity markets, deciphering the Libor and Euribor spreads during the subprime crisis, information transmission between sovereign debt CDS and other financial factors for Latin America, time-varying mixture GARCH models and asymmetric volatility, and diagnostic checking for non-stationary ARMA models with an application to financial data.
    Keywords: Dynamic price integration; local covariates; risk management; global financial crisis; credit risk; liquidity shock; micro-market noise; corporate risk taking; options; volatility; quantiles; news sentiment; contingent capital; value-at-risk (see paper)
    JEL: G11 G12 G13 G15 G18
    Date: 2013–01–21
  7. By: Peter Drysdale (East Asia Bureau of Economic Research); Sébastien Willis (Crawford School of Public Policy)
    Abstract: The industrial transformation of Asia is a development on a scale unprecedented in human history. Following the industrial revolution towards the end of the eighteenth century, Europe and North America each in turn came to dominate the world economy and global power. Now economic weight is shifting towards population weight due to convergence in productivity. Asia is re-emerging as the world’s biggest element in the world economy. In 1980, Asia produced just under 20 per cent of global output measured at purchasing power parity. In 2010 that share was 35 per cent.2 This has happened in the space of a few decades whereas it took more than three quarters of a century for the industrial revolution to transform the European economy and political power. In the last twenty five years the economy of China, a nation of 1.3 billion, has grown by a factor of twenty. Twenty years from now, even ten years from now, Asia’s influence will be even greater. By 2025, one in two of the world’s population and four of the 10 largest economies will be in Asia. Asia is likely then to account for almost half of the world output and more than half world trade, with China accounting for half of that. In 2010, China’s per capita income was 30 per cent of the United States’; by 2050 it will be 55 per cent and India’s likely 42 per cent. The Chinese economy will likely be bigger than America’s within the coming half decade. Asia has never been of greater global significance, as global economic and strategic weight shifts from west to east. Global institutional frameworks are coming to reflect this, with six Asian members of the G20, including Australia. These developments set the context in which the G20 has emerged as a new fulcrum for global economic governance.
    Keywords: G20, China, India, G7, International policy coordination, the G20 summit, financial crisis
    Date: 2013–01
  8. By: Yoshifumi Fukunaga (Economic Research Institute for ASEAN and East Asia (ERIA)); Ikumo Isono (Economic Research Institute for ASEAN and East Asia (ERIA))
    Abstract: In November 2012, the leaders of the ASEAN+6 countries agreed to launch a new FTA negotiation called the gRegional Comprehensive Economic Partnershiph (RCEP). In this paper, we conduct stocktaking studies of ASEANfs own FTA and five existing FTAs with 6 dialogue partner countries, to identify the possible benefits and challenges of RCEP. We find that the five gASEAN+1 FTAsh provide an insufficient level of liberalization, both in tariffs and services trade. The coexistence of five FTAs with different rules of origin (ROOs) creates a potential gnoodle-bowlh situation which impedes the effective use of the FTAs. Also, the China-Japan-Korea FTA and the Trans-Pacific Partnership (TPP) pose challenges to the gASEAN Centralityh. We recommend that RCEP negotiation should address those challenges by (a) concluding a comprehensive and high-level RCEP by 2015; (b) setting the target of 95% percent tariff elimination with a gcommon concessionh approach; (c) introducing the gcore non-tariff measures (NTMs)h concept and removing them; (d) allowing co-equal rules in the ROOs, setting a general rule of gRVC(40) or CTHh and developing consolidated operational certification procedures; (e) introducing concrete and tangible trade facilitation programs and addressing FTA utilization issues; and (f) liberalizing trade in services at a high level.
    Keywords: FTA; ASEAN; RCEP
    JEL: F13 F15 F53
    Date: 2013–01–22
  9. By: Verico, Kiki
    Abstract: The ASEAN wide economic cooperation under the ‘ASEAN umbrella principle’ is fitting the ASEAN’s ‘open and soft regionalism’ character. It helps ASEAN to achieve a comprehensive trade and investment integration in the short to medium-run and financial integration in the long-run. In Southeast Asia, this wide-regionalism has been reflected in the ASEAN Plus framework. Among one of them is the ASEAN+3, which covers ten ASEAN member states and three East Asian countries (China, Japan and South Korea). This paper attempts to analyze the stability and sustainability of economic integration of the ASEAN+3. It adopts the ‘inflation rate similarity among observed countries’ as a proxy variable of regional economic integration and implements a time-series analysis of Stationarity Test to observe whether inflation rate similarity is the most appropriate variable for assessing the both short and long-run economic integration of the ASEAN+3. As for the short-run economic integration, this paper implements the ECM (Error Correction Mechanism) to identify whether pair inflation rate similarity among observed countries is stable and whether it is has dynamic or static relations. As for long-run economic integration, this paper implements Cointegration Test and its result has been utilized as the benchmark to select the observed countries for a further relation analysis between inflation and exchange rate. This relation is a proxy to describe long-run trade relations of the observed countries either they do compete or complement among each other.
    Keywords: economic integration; inflation rate similarity; regional economic enlargement; exchange rate and trade relation; ASEAN+3
    JEL: F15 E31 O24 R11
    Date: 2013–01–16
  10. By: Ryo Kambayashi (Institute of Economic Research, Hitotsubashi University); Daiji Kawaguchi (Faculty of Economics, Hitotsubashi University); Ken Yamada (Singapore Management University, School of Economics)
    Abstract: The statutory minimum wage in Japan has steadily increased over the past few decades even during a period of deflation. This paper examines the impact of the minimum wage on wage and employment outcomes under this unusual circumstance. We find that the increased bite of the minimum wage resulted in the compression of the lower tail of the wage distribution among women and that the wage compression is partially attributed to employment loss resulting from the minimum-wage increase. The increased bite of the minimum wage accounts for one half of the reduction in lowertail inequality that occurred among women during the period between 1994 and 2003.
    Keywords: minimum wage, wage inequality, employment loss, truncated distribution, deflation
    JEL: J23 J31 J38
    Date: 2012–11
  11. By: Brishti Guha (Singapore Management University, School of Economics)
    Abstract: I unify the following (1) men face paternal uncertainty while women do not face maternal uncertainty, (2) putative fathers and paternal kin care about true paternity, (3) paternity confidence is systematically lower in matrilocal cultures than in patrilocal ones, (4) inheritance tends to be patrilineal in high paternity confidence cultures and matrilineal in low confidence ones, and (5) most societies with patrilineal inheritance were patrilocal while most societies with matrilineal inheritance were matrilocal. I model the co-evolution of inheritance patterns and post-marital residence patterns - and their relationship with paternity uncertainty. Using a game theoretic model, I examine how a "high paternity confidence" patrilocal-patrilineal equilibrium and a "low paternity confidence" matrilineal-matrilocal equilibrium could emerge. The endogenous choice of the old to monitor the sexual behavior of the young women who reside with them, thereby affecting the paternity confidence of the young women's husbands and hence their productive incentives, is crucial.
    Keywords: Uncertain paternity; grandparents; incentives; patrilocality; inheritance; monitoring
    Date: 2012–12

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