nep-sea New Economics Papers
on South East Asia
Issue of 2014‒02‒08
thirteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Is There a Southeast Asian Development Model? By Hal Hill
  2. The Role of Foreign Banks in Monetary Policy Transmission: Evidence from Asia during the Crisis of 2008-9 By Bang Nam Jeon; Ji Wu
  3. Regional Organizations and Sanctions Against Members: Explaining the Different Trajectories of the African Union, the League of Arab States, and the Association of Southeast Asian Nations By Elin Hellquist
  4. The Relative Significance of EPAs in Asia-Pacific By KAWASAKI Kenichi
  5. Finding the Best Indicators to Identify the Poor By Adama Bah
  6. Estimating Vulnerability to Poverty using Panel data: Evidence from Indonesia By Adama Bah
  7. Nuclear Deterrence in Asia and the Pacific By Gareth Evans
  8. Minimum Wage: Does It Improve Welfare in Thailand? By Del Carpio, Ximena; Messina, Julián; Sanz-de-Galdeano, Anna
  9. The impact of improved access to market information through mobile phones usage on selling prices: Evidence from rural areas in Cambodia By Daichi Shimamoto; Hiroyuki Yamada; Martin Gummert
  10. The different effects of risk preferences on the adoption of agricultural technology: evidence from a rural area in Cambodia By Daichi Shimamoto; Hiroyuki Yamada; Ayako Wakano
  11. Political dynasties and poverty: Resolving the “chicken or the egg” question By Mendoza, Ronald; Beja Jr, Edsel; Venida, Victor; Yap II, David
  12. Machine News and Volatility: The Dow Jones Industrial Average and the TRNA Sentiment Series By David E. Allen; Michael McAleer; Abhay K. Singh
  13. Very Simple Markov-Perfect Industry Dynamics By Abbring, Jaap H.; Campbell, Jeffrey R.; Tilly, Jan; Yang, Nan

  1. By: Hal Hill (Australian National University)
    Abstract: The 10 states of Southeast Asia have combined to form the developing world’s most successful and durable regional grouping, the Association of Southeast Asian Na-tions, ASEAN. Economic integration among them is high and increasing. The ambi-tious ASEAN Economic Community is scheduled to take effect from December 2015, and should further accelerate this integration. But the socio-economic and institution-al disparities among them are also very large. This paper therefore asks the ques-tion, does it make sense to contemplate a ‘Southeast Asian development model’? Given this diversity, such a model obviously does not yet exist. But over time, these countries are converging with respect to their openness, their macroeconomic man-agement and some aspects of their social policy. The poorer countries are generally growing faster than the richer ones, suggesting gradual convergence. There are also important spillover and demonstration effects evident from the region’s leaders to its followers. Whether these developments will lead to the adoption of some sort of co-herent regional development strategies remains to be seen.
    Keywords: Development models, Southeast Asia, regional economic integration
    JEL: F55 H11 O21 O53
    Date: 2014–01
  2. By: Bang Nam Jeon (Drexel University and Hong Kong Institute for Monetary Research); Ji Wu (Southwestern University of Finance and Economics)
    Abstract: Since the 1997-8 Asian financial crisis, the level of foreign bank penetration has increased steadily in Asian banking markets. This paper examines the impact of foreign banks on the monetary policy transmission mechanism in emerging Asian economies during the period from 2000 to 2009, with a specific focus on the global financial crisis of 2008-9. We present consistent evidence that, on the whole, an increase in foreign bank penetration weakened the effectiveness of the monetary policy transmission mechanism in the host emerging Asian countries during crisis periods. We also investigate various conditions and environments, including the type of monetary policy shocks, the severity of shocks upon parent banks in global crisis, the dependence of parent banks on the wholesale funding market, the country of origin of foreign banks, and entry modes, under which the effectiveness of monetary policy transmission is reduced more severely due to the increasing presence of foreign banks in the emerging Asian banking markets.
    Keywords: Foreign Bank Penetration, Monetary Policy Transmission, Asian Banking
    JEL: E44 F43 G21
    Date: 2014–01
  3. By: Elin Hellquist
    Keywords: regional development
    Date: 2014–01–14
  4. By: KAWASAKI Kenichi
    Abstract: This paper analyzes the relative significance of regional Economic Partnership Agreements (EPAs) in Asia-Pacific. The economy-wide impacts of tariff removals and reductions in non-tariff measures (NTMs) are estimated by using a Computable General Equilibrium (CGE) model of global trade. The Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP) are shown to complement each other rather than be competitors. The income gains of Asia-Pacific Economic Cooperation (APEC) economies as a whole account for 1.2 per cent of regional GDP by the TPP, 1.0 per cent by the RCEP, and 4.3 per cent by the Free Trade Area of the Asia-Pacific (FTAAP). Meanwhile, larger economic benefits are expected from NTMs reductions in addition to tariff removals. It is thus essential to reform domestic markets in order to enjoy greater economic benefits from international EPAs.
    Date: 2014–01
  5. By: Adama Bah (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: Proxy-means testing (PMT) is a method used to assess household or individual welfare level based on a set of observable indicators. The accuracy, and therefore usefulness of PMT relies on the selection of indicators that produce accurate predictions of household welfare. In this paper I propose a method to identify indicators that are robustly and strongly correlated with household welfare, measured by per capita consumption. From an initial set of 340 candidate variables drawn from the Indonesian Family Life Survey, I identify the variables that contribute most significantly to model predictive performance and that are therefore desirable to be included in a PMT formula. These variables span the categories of household private asset holdings, access to basic domestic energy, education level, sanitation and housing. A comparison of the predictive performance of PMT formulas including 10, 20 and 30 of the best predictors of welfare shows that leads to recommending formulas with 20 predictors. Such parsimonious models have similar predictive performance as the PMT formulas currently used in Indonesia, although these latter are based on models of 32 variables on average.
    Keywords: Proxy-Means Testing;Variable/Model Selection;Targeting;Poverty;social protection
    Date: 2014–01–24
  6. By: Adama Bah (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: Traditional poverty measures fail to indicate the degree of risk of becoming or remaining poor that households are confronted to. They can therefore be misleading in the context of implementing poverty reduction policies. In this paper I propose a method to estimate an index of ex ante vulnerability to poverty, defined as the probability of being poor in the (near) future given current observable characteristics, using panel data. This method relies on the estimation of the expected mean and variance of future consumption conditional on current consumption and observable characteristics. It generates a vulnerability index, or predicted probability of future poverty, which performs well in predicting future poverty, including out of sample. About 80% of households with a 2000 vulnerability index of 100% are actually poor in 2007. This approach provides information on the population groups that have a high probability of becoming or remaining poor in the future, whether currently poor or not. It is therefore useful to complement traditional poverty measures such as the poverty headcount, in particular for the design and planning of poverty reduction policies.
    Keywords: Poverty;vulnerability;Household consumption
    Date: 2014–01–24
  7. By: Gareth Evans
    Abstract: The Asia Pacific region includes six of the world’s nine nuclear-armed states, and in all of them relevant policymakers, still caught in a Cold War mindset, continue to believe in nuclear deterrence as a force for peace and stability, perceiving nuclear disarmament to be not only unachievable, but undesirable. But — whether the context is major powers seeking to neutralise threats from each other (United States, Russia, China and India), non-nuclear allies seeking nuclear protection from various threat contingencies (Japan, South Korea and Australia) or vulnerable states seeking a ‘strategic equaliser’ (Pakistan and North Korea) — the traditional strategic arguments for nuclear deterrence are much weaker than they may first seem. Whatever may have been the case for the Cold War years, in today’s world the risks associated with the acquisition or retention of nuclear weapons far outweigh any conceivable utility they may have. The financial arguments against them — that they are indefensibly costly — are strong. And the humanitarian arguments are overwhelming: nuclear weapons remain the most indiscriminately inhumane ever devised, and they should be outlawed as chemical and biological weapons have been. Making disarmament happen will never be easy, but — with the right political leadership — is not impossible. Focusing, realistically, in the first instance on minimization rather than elimination, practical steps can be taken to dramatically reduce nuclear weapon numbers, deployment and alert status, and doctrinal reliance on them. Doing so would dramatically reduce, both regionally and globally, the now ever-present risk of nuclear catastrophe.
    Keywords: Asia, Pacific, nuclear, deterrence, disarmament
    Date: 2013–12–22
  8. By: Del Carpio, Ximena (World Bank); Messina, Julián (World Bank); Sanz-de-Galdeano, Anna (Universitat Autònoma de Barcelona)
    Abstract: We study the causal impact of the minimum wage on employment and welfare in Thailand using a difference-in-difference approach that relies on exogenous policy variation in minimum wages across provinces. We find that minimum-wage increases have small disemployment effects on female, elderly, and less-educated workers and large positive effects on the wages of prime-age male workers. As such, increases in the minimum wage are associated with increases in household consumption per capita in general, but the consumption increase is greatest among those households around the median of the distribution. In fact, rises in the minimum wage increased inequality in consumption per capita within the bottom half of the distribution.
    Keywords: minimum wage, household consumption, poverty, employment, uncovered sector
    JEL: J31 D31
    Date: 2014–01
  9. By: Daichi Shimamoto (Graduate School of Economics, Osaka University, Japan. Research Fellow, Japan Society for the Promotion of Science, Japan); Hiroyuki Yamada (Osaka School of International Public Policy, Osaka University, Japan); Martin Gummert (International Rice Research Institution, Philippines)
    Abstract: Monopsony is often observed in local agricultural markets in developing countries because of the high entry cost to buyers; farmers in such markets therefore sell their agricultural products at a lower price. However, this situation seems to be changing with the diffusion of mobile phones. This paper investigates how access to market information through mobile phone usage impacts the selling price of rice in rural areas in Cambodia. We conducted a survey of farmersf households concerning agricultural production processes and rice sales in 20 villages in four provinces (Battambang, Prey Veng, Pursat, and Takeo). We find that farmers who have access to market information through the use of mobile phones are more likely to sell their rice at a higher price. In addition, we observe that the offers received by farmers with better access to market information through mobile phone usage tend to affect selling prices. The results imply that improved access to market information through the use of mobile phones improves farmersf bargaining power against traders, enabling them to sell their rice at a higher price.
    Keywords: Agricultural Prices, Mobile phone, Cambodia
    JEL: O12 D82 D83
    Date: 2014–02
  10. By: Daichi Shimamoto (Graduate School of Economics, Osaka University, Japan. Research Fellow, Japan Society for the Promotion of Science, Japan); Hiroyuki Yamada (Osaka School of International Public Policy, Osaka University, Japan); Ayako Wakano (Graduate School of Economics, Osaka University, Japan)
    Abstract: This paper investigates how farmersf risk attitudes affected the adoption of agricultural technology in a rural area in Cambodia. We incorporated prospect theory to farmersf utility function and examined the effect of the risk attitude of farmers to the adoption of two technologies: adoption of a moisture meter for measuring the moisture content of seeds, a recently introduced post-harvest technology, and a modern rice variety that was introduced in the 1990s. The results indicated that farmers overweighted a small probability and risk averse farmers adopted a moisture meter to measure the moisture contents of seeds significantly. With respect to the modern rice variety, farmersf risk attitude did not affect the adoption. Our results and the results of a previous study imply that the type of risk and uncertainty faced by farmers at the time of decision-making of its adoption partly determine the effect of risk attitude on agricultural adoption.
    Keywords: technology adoption, risk preferences, prospect theory
    JEL: O14 O33
    Date: 2014–02
  11. By: Mendoza, Ronald; Beja Jr, Edsel; Venida, Victor; Yap II, David
    Abstract: Political dynasties—members of the same family occupying elected positions sequentially for the same position or simultaneously across different positions—have become a common feature in many developing countries with democratic political systems. In the Philippines, for instance, political dynasties are prevalent in poorer regions, which lead to the following query: does poverty bring about political dynasties, or do political dynasties engender poverty? Using an instrumental variable technique to analyze metrics on political dynasties, we find strong evidence that poverty entrenches political dynasties but weak evidence that political dynasties reduce or exacerbate poverty.
    Keywords: democracy; political dynasty; inclusive growth; political equality; social inequality
    JEL: D70 I39 O53 P16
    Date: 2014–02–01
  12. By: David E. Allen (Centre for Applied Financial Studies, UniSA University of South Africa, and, visiting, School of Mathematics and Statistics, University of Sydney); Michael McAleer (National Tsing Hua University, Taiwan, Econometric Institute, Erasmus University Rotterdam, the Netherlands, and Complutense University of Madrid, Spain); Abhay K. Singh (School of Business, Edith Cowan University, Perth, Australia)
    Abstract: This paper features an analysis of the relationship between the volatility of the Dow Jones Industrial Average (DJIA) Index and a sentiment news series using daily data obtained from the Thomson Reuters News Analytics (TRNA) provided by SIRCA (The Securities Industry Research Centre of the Asia Pacic). The expansion of on-line financial news sources, such as internet news and social media sources, provides instantaneous access to financial news. Commercial agencies have started developing their own filtered financial news feeds, which are used by investors and traders to support their algorithmic trading strategies. In this paper we use a sentiment series, developed by TRNA, to construct a series of daily sentiment scores for Dow Jones Industrial Average (DJIA) stock index component companies. A variety of forms of this measure, namely basic scores, absolute values of the series, squared values of the series, and the first differences of the series, are used to estimate three standard volatility models, namely GARCH, EGARCH and GJR. We use these alternative daily DJIA market sentiment scores to examine the relationship between financial news sentiment scores and the volatility of the DJIA return series. We demonstrate how this calibration of machine filtered news can improve volatility measures.
    Keywords: DJIA; Sentiment Scores; TRNA; Conditional Volatility Models
    JEL: C58 G14
    Date: 2014–01–23
  13. By: Abbring, Jaap H. (Tilburg University); Campbell, Jeffrey R. (Federal Reserve Bank of Chicago); Tilly, Jan (University of Pennsylvania); Yang, Nan (National University of Singapore)
    Abstract: This paper develops an econometric model of industry dynamics for concentrated markets that can be estimated very quickly from market-level panel data on the number of producers and consumers using a nested fixed-point algorithm. We show that the model has an essentially unique symmetric Markov-perfect equilibrium that can be calculated from the fixed points of a finite sequence of low-dimensional contraction mappings. Our nested fixed point procedure extends Rust's (1987) to account for the observable implications of mixed strategies on survival. We illustrate the model's empirical application with ten years of County Business Patterns data from the Motion Picture Theaters industry in 573 Micropolitan Statistical Areas. The results are suggestive of fierce competition between theaters in the market for film exhibition rights.
    Keywords: demand uncertainty; dynamic oligopoly; firm entry and exit; Markov-perfect equilibrium; nested fixed point estimator; sunk costs; toughness of competition.
    JEL: C25 C73 L13
    Date: 2013–11–30

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