nep-sea New Economics Papers
on All new papers
Issue of 2014‒09‒08
fifteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Shift-volatility transmission in East Asian Equity Markets By Marcel Aloy; Gilles de Truchis; Gilles Dufrenot; Benjamin Keddad
  3. Financial Integration among ASEAN+3 Countries: Evidence from Exchange Rates By Lee, Chin; M., Azali
  4. A Macro Assessment of China Effects on Malaysian Exports and Trade Balances By Tze-Haw Chan; Hooi-Hooi Lean; Chee-Wooi Hooy
  5. Toward Improving Education Quality: Indonesia’s promising path By Julia Tobias; Joseph Wales; Ekki Syamsulhakim; Suharti
  6. Trade obstacles, inventory level of inputs, and internationalization of enterprise activities : a comparison between Southeast Asia and Latin America By Ueki, Yasushi
  7. Agricultural extension and technical efficiency of tea production in northeastern Vietnam By Phu Nguyen-Van; Nguyen To-The
  9. Deposit dollarization in Myanmar By Kubo, Koji
  10. School autonomy and accountability in Thailand: a systems approach for assessing policy intent and implementation By Arcia, Gustavo; MacDonald, Kevin; Patrinos, Harry Anthony
  11. Are 15-Year-Olds Creative Problem-solvers? By OECD
  12. The Federal Reserve Engages the World (1970-2000): An Insider’s Narrative of the Transition to Managed Floating and Financial Turbulence By Edwin M. Truman
  13. Consequences of Climate Change Damages for Economic Growth: A Dynamic Quantitative Assessment By Rob Dellink; Elisa Lanzi; Jean Chateau; Francesco Bosello; Ramiro Parrado; Kelly de Bruin
  14. An Update of the OECD International Trade Equations By Myriam Morin; Cyrille Schwellnus
  15. Impact of Sensitive Lists under SAFTA: Quantitative Assessment using a Partial Equilibrium Modeling By Shahid Ahmed; Sushil Kumar

  1. By: Marcel Aloy; Gilles de Truchis; Gilles Dufrenot; Benjamin Keddad
    Abstract: This paper attempts to provide evidence of “shift-volatility” transmission in the East Asian equity markets. By “shift-volatility”, we mean the volatility shifts from a low level to a high level, corresponding respectively to tranquil and crisis periods. We examine the interdependence of equity volatilities between Hong Kong, Indonesia, Japan, Malaysia, the Philippines, Singapore, Thailand and the United States. Our main issue is whether shift-volatility needs to be considered as a regional phenomenon, or from a more global perspective. We find that the timing/spans of high volatility regimes correspond adequately to years historically documented as those of crises (the Asian crisis and the years following the 2008 crisis). Moreover, we suggest dierent indicators that could be useful to guide the investors in their arbitrage behavior in the dierent regimes: the duration of each state, the sensitivity of the volatility in a market following a change in the volatility in another market. Finally, we are able to identify which market can be considered as leading markets in terms of volatility.
    Keywords: Regime shifts, Equity Volatility, East Asia, TVPMS
    JEL: R31 G15 C32
    Date: 2014–08–29
  2. By: Thai-Thanh Dang; Annabelle Mourougane
    Abstract: The objective of this paper is to estimate the effect on MFP of air pollution in 7 ASEAN economies (Cambodia, Indonesia, Lao PDR, Malaysia, Philippines, Thailand and Vietnam) and China. For this purpose, standard measures of MFP are corrected for the impact of pollution applying the framework developed by Brandt et al. (2013), and valuing pollution through country-specific time-varying shadow price estimates for CO2, SOx, NOx and PM10, derived from an output distance function approach. Shadow prices of pollutants, the opportunity cost of abating pollution in the form of reduced output, are found to vary widely across economies, depending on national environmental regulations, the use of inefficient abatement technologies, and the structure of the economy. In all countries but Cambodia, shadow prices of the various pollutants experience a downward trend since the Asian crisis, suggesting that ASEAN countries and China have strengthened their regulatory framework and encouraged the adoption of clean technologies. Accounting for pollution leads to very different adjustments to standard MFP measures across countries. In most countries the adjustment is positive, suggesting that standard MFP measures have tended to underestimate the true measure. Such correction would be above 2 percentage points in Lao PDR and the Philippines. It is estimated to be around 1 percentage point in China, Indonesia and Thailand and about half that size in Malaysia. It would be negative in Cambodia in this country and nil in Vietnam.
    Date: 2014–08–29
  3. By: Lee, Chin; M., Azali
    Abstract: As the economies of Asian have moved towards closer economic ties in recent years, the establishment of regional exchange rate arrangement has become an important regional policy concern. A study by the Asian Development Bank forecast that Asian will be the world's largest economy by 2050. Hence, it is not reasonable for Asian to continuously depend on US dollar. Asian must have its own currency and must responsible for its own financial stability. Regional cooperation (including integration) is critical for Asia’s march toward prosperity and facing vulnerabilities to global shocks. Financial integration in ASEAN+3 is assessed in this paper by examining the time-series stochastic behaviour and cointegration in a set of eight ASEAN+3 currencies. The findings imply that not all of the ASEAN+3 countries are financial integrated during the recent float. This finding provided weak support upon formation of regional monetary and exchange rate arrangement in Asia.
    Keywords: Financial Integration, Exchange Rate, Convergence, Cointegration, Granger-causality, Asian
    JEL: F31 F33 F36
    Date: 2013
  4. By: Tze-Haw Chan; Hooi-Hooi Lean; Chee-Wooi Hooy
    Abstract: This paper focuses on the impact of China’s export expansion on Malaysian monthly trading with to her 12 major trading partners over the liberalization era. Structural break(s) found mostly coincides with the Asia financial crisis and China’s accession into WTO and, regime shifts are evident in the long run relationship among the variables being studied. While the income effects are more apparent, real exchanges are rather insignificant and incorrectly signed for Malaysian bilateral trading. An attempt to correct current account imbalances by currency devaluation would thereby inappropriate. In addition, estimation of the trade balance models is more superior that complementary China effects are better captured for Malaysia trading with the advanced markets such as Australia, German, Japan, UK and the US. Such finding may partly due to the increase in global product fragmentation.
    Keywords: Malaysian exports, China effect, cointegration, VAR, structural break
    JEL: F31 C22 C51
    Date: 2014–08–29
  5. By: Julia Tobias (Overseas Development Institute (ODI), United Kingdom); Joseph Wales (Overseas Development Institute (ODI), United Kingdom); Ekki Syamsulhakim; Suharti (Ministry of National Planning and Development (BAPPENAS))
    Abstract: Over the past few decades, Indonesia has made strong progress in improving education outcomes, with a particularly emphasis being placed on access to basic education in line with the government’s nine-year compulsory education policy. As in many other developing countries, moving beyond gains in education access and toward meaningful gains in education quality has been a greater challenge for Indonesia, however several notable positive trends have emerged. While the progress achieved specifically in terms of improving the quality of education remains a work in progress, several positive developments have emerged in recent years. Some of the key drivers of progress discussed in this report include strengthening the teaching force, reforming the curriculum and pedagogy, decentralization and school-based management, and increased budget and targeted support to address inequities. The diversity of reforms that have emerged and the use of research and evaluation to inform policy-making make Indonesia’s experience a particularly interesting case study with some useful lessons to offer. Published version (July 2014) of this paper can be accessed in ards-better-education-quality-indonesias -promising-path.
    Keywords: education quality, Indonesia
    JEL: I24
    Date: 2014–08
  6. By: Ueki, Yasushi
    Abstract: This paper investigates the impact of trade barriers such as customs clearance, subjective trade obstacles (customs and trade regulations), and inventory of inputs on the internationalization of enterprises in Southeast Asia and Latin America, using the World Bank's enterprise surveys. Empirical results show a negative association between the internationalization of enterprises and subjective trade obstacles, while the impact of subjective trade obstacles is not significant on enterprises already internationalized. An international comparison between Southeast Asia and Latin America suggests that enterprises in Latin America face unfavorable conditions that discourage them from becoming more closely inserted into international production networks.
    Keywords: Southeast Asia, Latin America, International trade, Exports, Business enterprises, Export propensity, Export intensity, Trade cost, Inventory control
    JEL: F14
    Date: 2014–08
  7. By: Phu Nguyen-Van; Nguyen To-The
    Abstract: This study uses the stochastic production frontier to analyze technical efficiency of tea production in northeastern Vietnam. Our study estimated that the average technical efficiency of tea production is very low, only about 32%. Technical efficiency can be improved by having a training on sale skills whereas it can be negatively affected by access to information on tea market. The results indicated that there are a big potential for improving technical efficiency in tea production by using the available inputs and technology. For the purpose of improving efficiency, efforts should be made on agricultural extension (keeping the current form of training on sale skills, modifying the provision of information on tea market). Producers are also recommended to be more careful on the adoption of tea variety for their cultivation.
    Keywords: Agriculture extension; technical efficiency; stochastic frontier; translog; tea production
    JEL: C21 D24 Q12 Q18
    Date: 2014–08–29
  8. By: Loganathan, Nanthakumar; Muhammad Shahbaz; Roshaiza Taha
    Abstract: This paper explores how carbon taxation and economic growth affect environment hazards in Malaysia using time series data over the period of 1974-2010. We applied cointegration and causality approaches to determine long term and the direction of causal relationship between these variables. Based on the results, we found the cointegration relationship between the variables. Furthermore, we noted that Kuznets’ theory i.e. inverted-U shaped curve between economic growth and CO2 emissions is valid for Malaysia but the carbon taxation policy is ineffective to control CO2 emissions. The causality analysis revealed that there is bidirectional relationship is found between carbon tax and CO2 emissions. Economic growth Granger causes CO2 emissions and carbon tax is Granger cause of economic growth. To enhance the awareness on pollution issues governments should rely on alternative instruments, which may give benefit not only to taxpayers but also to reduce pollution, which is the pivotal issue to be tackle globally.
    Keywords: economic growth, environment hazards
    Date: 2014–08–29
  9. By: Kubo, Koji
    Abstract: Myanmar has peculiar conditions of deposit dollarization that were shaped by administrative controls. On the one hand, restrictive controls encouraged the accumulation of foreign currency deposits (FCD). On the other hand, foreign currency loans (FCL) were not practiced officially; therefore, FCD was not utilized for credit. Given the adverse effects and persistence of dollarization in other dollarized economies and the recent recovery of local currency deposits in Myanmar, this paper opts for the prohibition of FCL and offers policy measures for de-dollarization.
    Keywords: Myanmar, Foreign exchange, Monetary policy, dollarization, Foreign currency deposits, Foreign currency loans
    JEL: E41 F31 O53
    Date: 2014–08
  10. By: Arcia, Gustavo; MacDonald, Kevin; Patrinos, Harry Anthony
    Abstract: There is a consensus on the need for Thailand to reform its education system to be able to compete with other high performing countries in the region. In terms of learning outcomes, the most recent evidence from the Programme for International Student Assessment shows little improvement over time. This paper uses the World Bank's Systems Approach for Better Education Results (SABER) approach in Thailand to contrast policy intent and policy implementation in school autonomy and accountability. The policy implementation data were obtained from a survey of school principals of the schools that participated in the Programme for International Student Assessment and merged the data sets. First, the study analyzes the gap between policy intent and policy implementation. Then it examines the effect of the gaps on various schooling outcomes while controlling for covariates. The analysis finds significant differences between the Systems Approach for Better Education Results indicators of policy intent and policy implementation in all areas assessed by the indicators. Schools in Thailand exercise more flexibility in their personnel management in practice than what is intended by policy; student assessments need to address issues of content, reliability, and validity and school accountability needs to improve the interpretation of student assessments to make schools more accountable. There is a positive association between the Programme for International Student Assessment scores and school autonomy and accountability.
    Keywords: Education For All,Tertiary Education,Disability,Teaching and Learning,Primary Education
    Date: 2014–08–01
  11. By: OECD
    Abstract: To do well on PISA’s first assessment of creative problem-solving skills, students need to be open to novelty, tolerate doubt and uncertainty, and dare to use intuition to initiate a solution. Just because a student performs well in core school subjects doesn’t mean he or she is proficient in problem solving. In Australia, Brazil, Italy, Japan, Korea, Macao China, Serbia, England (United Kingdom) and the United States, students perform significantly better in problem solving, on average, than students in other countries who show similar performance in reading, mathematics and science. Many of the best performers in problem solving are Asian countries and economies, where students demonstrate high levels of reasoning skills and self-directed learning. Meanwhile, compared to students of similar overall performance, students in Brazil, Ireland, Korea and the United States perform strongest on interactive problems that require students to uncover useful information by exploring the problem situation and gather feedback on the effect of their actions.
    Date: 2014–04
  12. By: Edwin M. Truman (Peterson Institute for International Economics)
    Abstract: This paper traces the evolution of the Federal Reserve and its engagement with the global economy over the last three decades of the 20th century: 1970 to 2000. The paper examines the Federal Reserve’s role in international economic and financial policy and analysis covering four areas: the emergence and taming of the great inflation, developments in US external accounts, foreign exchange analysis and activities, and external financial crises. It concludes that during this period the US central bank emerged to become the closest the world has to a global central bank.
    Keywords: Federal Reserve, Federal Open Market Committee, inflation, macroeconomic policies, monetary policy, external balance, exchange rates, exchange market intervention, financial crises, third world debt crises, Mexican crisis, Asian financial crises
    JEL: F3 F31 F32 F33 F34 E4 E42 F5 F52 F53
    Date: 2014–08
  13. By: Rob Dellink; Elisa Lanzi; Jean Chateau; Francesco Bosello; Ramiro Parrado; Kelly de Bruin
    Abstract: This report focuses on the effects of climate change impacts on economic growth. Simulations with the OECD’s dynamic global general equilibrium model ENV-Linkages assess the consequences of a selected number of climate change impacts in the various world regions at the macroeconomic and sectoral level. This is complemented with an assessment of very long-run implications, using the AD-RICE model. The analysis finds that the effect of climate change impacts on annual global GDP is projected to increase over time, leading to a global GDP loss of 0.7% to 2.5% by 2060 for the most likely equilibrium climate sensitivity range. Underlying these annual global GDP losses are much larger sectoral and regional variations. Agricultural impacts dominate in most regions, while damages from sea level rise gradually become more important. Negative economic consequences are especially large in South and South-East Asia whereas other regions will be less affected and, in some cases, benefit thanks to adjustments from international trade. Emissions to 2060 will have important consequences in later decades and centuries. Simulations with the AD-RICE model suggest that if emissions continue to grow after 2060, annual damages of climate change could reach 1.5%-4.8% of GDP by the end of the century. Some impacts and risks from climate change have not been quantified in this study, including extreme weather events, water stress and large-scale disruptions. These will potentially have large economic consequences, and on balance the costs of inaction presented here likely underestimate the full costs of climate change impacts. More research is needed to assess them as well as the various uncertainties and risks involved. However, this should not delay policy action, but rather induce policy frameworks that are able to deal with new information and with the fact that by their nature some uncertainties and risks will never be resolved. Conséquences des impacts du changement climatique sur la croissance économique : Une évaluation quantitative en dynamique Ce rapport approfondit les impacts du changement climatique sur la croissance économique. Sur la base de simulations dynamiques, effectuées avec le modèle d'équilibre général de l'OCDE ENV-Linkages, les conséquences sur la croissance de long terme d'un certain nombre d'impacts du changement climatique sont évaluées. Une appréciation des conséquences à très long terme avec le modèle AD-RICE complète cette analyse. L'analyse révèle que les effets des impacts du changement climatique sur le PIB annuel mondial devraient s’accroître à l’avenir, conduisant à une perte de PIB mondial de 0,7% à 2,5% en 2060, selon un éventail raisonnable de sensibilités climatiques. L’analyse souligne en outre de fortes disparités dans les impacts selon les secteurs et les régions concernées. Dans la plupart des régions, les impacts sur les rendements agricoles dominent, cependant la raréfaction des surfaces cultivables due à la montée des océans prend de plus en plus d’importance. Les conséquences économiques négatives devraient être particulièrement élevées dans le Sud et Sud-Est de l'Asie, tandis que les autres régions seraient moins affectées et, pourraient même, dans certains cas, bénéficier du changement climatique, grâce notamment aux ajustements du commerce international. Les émissions de gaz à effets de serre dégagées jusqu’en 2060 auront d'importantes conséquences dans les décennies et des siècles qui suivront. Des simulations effectuées avec le modèle AD-RICE suggèrent que si les émissions continuent à augmenter après 2060, les dommages annuels du changement climatique pourraient atteindre 1,5% -4,8% du PIB d'ici la fin du siècle. Certains impacts et risques du changement climatique ne sont pas quantifiés dans ce rapport, y compris des événements météorologiques extrêmes, le stress hydrique et des perturbations à grande échelle. Ceux-ci pourraient avoir de grandes conséquences économiques et, finalement, les coûts de l'inaction présentés dans ce rapport sous-estiment probablement les coûts totaux des impacts du changement climatique. Un progrès de la science dans ces domaines seraient nécessaire afin de mieux comprendre ces sujets ainsi que les divers incertitudes et risques associés. Toutefois, cela ne devrait pas retarder l'action politique, mais plutôt inciter à circonscrire des cadres politiques capables de faire face à de tenir compte de ces nouvelles informations.
    Keywords: economic growth, climate change, computable general equilibrium model, changement climatique, modèle d’équilibre général calculable, croissance économique
    JEL: D58 O44 Q54
    Date: 2014–06–30
  14. By: Myriam Morin; Cyrille Schwellnus
    Abstract: This paper provides a detailed description of recent research to re-estimate and re-specify the international trade volume and price equations that are used in the OECD Economics Department to analyse and project international trade developments. The set of countries covered by the estimations has been significantly enlarged, with estimates of the factors affecting export performance, import penetration and trade prices presented for 41 countries, including countries that have recently joined the OECD (Chile, Estonia, Israel and Slovenia) and major emerging countries (Argentina, Brazil, China, India, Indonesia, Russia and South Africa). Reflecting the heterogeneity of countries included in the estimations, procedures for grouping them have been modified to allow for country specifics as much as possible. Structural breaks over the estimation period – which now typically covers the mid-1980s to 2012 and includes the global trade collapse of 2009 – are dealt with by the flexible modelling of deterministic trends, including the allowance for several rather than single trend reversals. Une mise à jour des équations de commerce international de l'OCDE Ce document fournit une description détaillée du travail de ré-estimation et re-spécification des équations de volume et de prix du commerce international qui sont utilisées dans le Département des affaires économiques de l'OCDE pour analyser et prévoir l'évolution du commerce international. L'ensemble des pays couverts par les estimations a été considérablement élargi : les estimations des facteurs affectant la performance à l'exportation, la pénétration des importations et les prix du commerce sont présentées pour 41 pays, y compris les pays qui ont récemment adhéré à l'OCDE (Chili, Estonie, Israël et Slovénie) et les grands pays émergents (Argentine, Brésil, Chine, Inde, Indonésie, Russie et Afrique du Sud). Afin de mieux refléter l'hétérogénéité des pays inclus dans les estimations, les procédures de regroupement des pays ont été modifiées pour prendre en compte les spécificités des pays autant que possible. Les ruptures structurelles au cours de la période d'estimation - qui maintenant couvre généralement le milieu des années 1980 jusqu’à 2012 et désormais comprend l'effondrement du commerce mondial de 2009 - sont traitées par la modélisation flexible de tendances déterministes qui permet de multiples points d’inflexion plutôt qu’un point unique d’inversion de tendance.
    Keywords: trade, trade forecasting, trade elasticity, élasticité du commerce, prévisions de commerce, commerce international
    JEL: F14 F17
    Date: 2014–06–23
  15. By: Shahid Ahmed; Sushil Kumar
    Abstract: The long list of product in sensitive list maintained by the member countries is one of the major weaknesses of South Asia Free Trade agreement for its effectiveness. Present study analyzes the impact of sensitive list (Phase II) under the SAFTA at disaggregate level (HS6 digit) by using partial equilibrium modeling. This paper more specifically looked at consumer surplus, trade creation, trade diversion as well as impact on tariff revenues among India, Pakistan, Sri Lanka and Bangladesh as a result of removal of sensitive list. The study indicates positive effect on consumer surplus and trade flows; and negative effect on tariff revenues. RCA index indicated comparative advantage in textiles, machinery/ electric product, chemicals and allied products and metal products and different categories of textile products. The simulation results shows that aggregate total trade effect is US$ 902.82 million and a surge in export of crude oil, technically specified natural rubber, cotton, smoked sheets, articles of apparel and clothing accessories etc. Finally, the study recommended that each country should reduce the sensitive list.
    JEL: F13 F17
    Date: 2014–08–28

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