nep-sea New Economics Papers
on South East Asia
Issue of 2017‒03‒05
twenty-one papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Trade protection and productivity differentials between multinationals and local firms in Vietnamese manufacturing By Thuyen, Truong Thi Ngoc; Jongwanich, Juthathip; Ramstetter, Eric D.
  2. The integration of Vietnam in the global economy and its effects for Vietnamese economic development By Herr, Hansjörg.; Schweisshelm, Erwin.; Vu, Truong-Minh.
  3. Global productions sharing and local entrepreneurship in developing countries: Evidence from Penang export hub, Malaysia By Prema-chandra Athukorala
  4. Forecasting Inflation in Vietnam with Univariate and Vector Autoregressive Models By Tran Thanh Hoa
  5. Inequality and Fiscal Redistribution in Middle Income Countries: Brazil, Chile, Colombia, Indonesia, Mexico, Peru and South Africa By Nora Lustig
  6. Impact of ISO 9001 Standard on the Quality Costs of Construction Projects in the Philippines By Neyestani, Behnam; Juanzon, Joseph Berlin P.
  7. Business process outsourcing in the Philippines : challenges for decent work By Errighi, Lorenza.; Bodwell, Charles.; Khatiwada, Sameer.
  8. When Regional Policies Fail: An Evaluation of Indonesia's Integrated Economic Development Zones By Rothenberg, Alexander D.; Bazzi, Samuel; Nataraj, Shanthi; Chari, Amalavoyal V.
  9. The Long-Term Impacts of Violent Conflicts on Human Capital: U.S. Bombing and, Education, Earnings, Health, Fertility and Marriage in Cambodia By Chan Hang Saing; Harounan Kazianga
  10. US-China Competition in Defense Technological and Industrial Development: Implications for the Balance of Power Over the Long Term By MONTGOMERY, Evan Braden
  11. Characterizing Global and Regional Manufacturing Value Chains: Stable and Evolving Features By Zhi Wang; Shang-Jin Wei; Xinding Yu and Kunfu Zhu
  12. Employment, Education and the State. By Mundle, Sudipto
  13. Energy Costs in the Transforming Agrifood Value Chains in Asia By Reardon, Thomas
  14. Multilevel Analysis of Free Trade Agreements and Foreign Direct Investment in the Asia Pacific Region By KEIDA Masayuki; TAKEDA Yosuke
  15. Beyond Catch Up: Some Speculations About the Next Twenty Five. By Mundle, Sudipto
  16. The Operation and Demise of the Bretton Woods System; 1958 to 1971 By Michael D. Bordo
  17. : The role of US based FDI flows for global output dynamics By Huber, Florian; Fischer, Manfred M.; Piribauer, Philipp
  18. The role of US based FDI flows for global output dynamics By Florian Huber; Manfred M. Fischer; Philipp Piribauer
  19. Income disparities, population and migration flows over the 21st century By Frédéric Docquier; Joël Machado
  20. Welfare: Savings not Taxation By Douglas, R; MacCulloch, Robert
  21. A Serenity Prayer for Monetary Policymakers: Loretta J. Mester, President and Chief Executive Officer, Federal Reserve Bank of Cleveland - The Global Interdependence Center, Central Banking Series, Singapore - February 20, 2017 By Mester, Loretta J.

  1. By: Thuyen, Truong Thi Ngoc; Jongwanich, Juthathip; Ramstetter, Eric D.
    Abstract: This paper investigates the how effective protection and firm ownership affected firm productivity in Vietnam during 2005-2010. In labour-intensive industries and industries with intermediate labour intensity, the level of effective protection in an industry had a significantly negative effect on firm productivity. Multinational enterprise (MNE) joint ventures (JVs) and state-owned enterprises (SOEs) had consistently higher productivity than private firms, with productivity usually being highest in JVs. Wholly-foreign MNEs (WOs) also had significantly higher productivity than private firms in 2005-2007, but lower productivity than JVs or SOEs, and in 2008-2010, WO-private differentials were insignificant. In capital-intensive industries, the pattern of productivity differentials (highest in JVs, followed by SOEs, WOs, and private firms) was similar in the earlier period, but not in the latter period or when all years were included in the sample. The level of effective protection also did not have a significant, independent effect on firm productivity in capital-intensive industries.
    Keywords: MNEs, trade policy, productivity, ownership mode, MNEs, trade policy, productivity, ownership mode
  2. By: Herr, Hansjörg.; Schweisshelm, Erwin.; Vu, Truong-Minh.
    Keywords: economic development, value chains, foreign investment, industrial policy, Viet Nam
    Date: 2016
  3. By: Prema-chandra Athukorala
    Abstract: This papers examines opportunities and policy options for developing countries to promote engagement of local firms in global production networks. The paper begins with a stage-setting overview of the ongoing process of global production sharing and the emerging opportunities local firm’s engagement. It then undertakes an illustrative case study of the export hub in the state of Penang in Malaysia. Forging operational links between multinational enterprises (MNEs), which set up assembly plants in Penang, and local firms was an integral part of the export-led development strategy of the state. This policy emphasis was instrumental in fostering a domestic supplier network around the operations of the MNE subsidiaries. A number of local firms, which emerged de novo through production sharing have become global players in their own right, with production bases in a number of other countries.
    Keywords: globalisation, trade policy, multinational enterprises, global production networks
    JEL: F21 F23 O24 O53
    Date: 2017
  4. By: Tran Thanh Hoa (The State Bank of Vietnam)
    Abstract: In this paper, I apply univariate and vector autoregressive (VAR) models to forecast inflation in Vietnam. To investigate the forecasting performance of the models, two naïve benchmark models (one is a variant of a random walk and the other is an autoregressive model) are first built based on Atkeson-Ohanian (2001), Gosselin-Tkacz (2001) and the specific properties of inflation in Vietnam. Then, I compute the pseudo out-of-sample root mean square error (RMSE) as a measure of forecast accuracy for the candidate models and benchmarks, using rolling window and expanding window forecasting evaluation strategies. The process is applied to both monthly and quarterly data from Vietnam for the period from 2000 through the first half of 2015. I also apply the forecast-encompassing Diebold-Mariano test to support choosing statistically better forecasting models from among the different candidates. I find that VAR_m2 is the best monthly model to forecast inflation in Vietnam, whereas AR(6) is the best of the quarterly forecasting models, although it provides a statistically insignificantly better forecast than the benchmark BM2_q.
    Keywords: Inflation, Forecast, Univariate Models, Vector Autoregressive Models, Forecast Accuracy
    JEL: C22 C32 C51 C53 E31 E37
    Date: 2017–02
  5. By: Nora Lustig (Stone Center for Latin American Studies, Department of Economics, Tulane University. Commitment to Equity Institute (CEQI).)
    Abstract: This paper examines the redistributive impact of fiscal policy for Brazil, Chile, Colombia, Indonesia, Mexico, Peru and South Africa using comparable fiscal incidence analysis with data from around 2010. The largest redistributive effect is in South Africa and the smallest in Indonesia. Success in fiscal redistribution is driven primarily by redistributive effort (share of social spending to GDP in each country) and the extent to which transfers/subsidies are targeted to the poor and direct taxes targeted to the rich. While fiscal policy always reduces inequality, this is not the case with poverty. Fiscal policy increases poverty in Brazil and Colombia (over and above market income poverty) due to high consumption taxes on basic goods. The marginal contribution of direct taxes, direct transfers and in- kind transfers is always equalizing. The marginal effect of net indirect taxes is unequalizing in Brazil, Colombia, Indonesia and South Africa. Total spending on education is pro-poor except for Indonesia, where it is neutral in absolute terms. Health spending is pro-poor in Brazil, Chile, Colombia and South Africa,roughly neutral in absolute terms in Mexico, and not pro-poor in Indonesia and Peru.
    Keywords: fiscal incidence, social spending, inequality, developing countries
    JEL: H22 D31 I3
    Date: 2015–07
  6. By: Neyestani, Behnam; Juanzon, Joseph Berlin P.
    Abstract: Since past two decades, ISO 9001 standard has shown its capabilities to lower cost, increase productivity, and satisfy stakeholders (customers) in the organizations. Although ISO 9001 standard has proven its benefits to different sectors in all over the world. But there is still debate among researchers and practitioners concerning the usefulness of applying ISO 9001 in construction projects. However, it seems that among different methods, quality cost analysis is an excellent technique to indicate how much ISO 9001 is able to improve effectively quality performance, and reduce costs in the projects. Thus, the main purpose of this study is to assess the effects of ISO 9001 implementation on quality cost in construction projects. For this aim, a literature review was conducted to design a structured questionnaire in a sample of the 67 respondents from ISO 9001:2008-certified projects of large-scale (AAA) construction companies in Metro Manila, Philippine. As a quantitative research, the inferential statistics analysis used to test the hypotheses of this study. Lastly, the results reported that ISO 9001 standard significantly affects the reduction of quality cost within construction projects in Metro Manila, Philippines.
    Keywords: ISO 9001 Certification; Quality Costing Method; Quality Costs; Control Costs; Failure Costs; Construction Projects.
    JEL: D2 L74 M11 N6 O22
    Date: 2017–01–24
  7. By: Errighi, Lorenza.; Bodwell, Charles.; Khatiwada, Sameer.
    Abstract: Advances in information and communication technology (ICT) have facilitated growth in the business process outsourcing (BPO) sector, and the Republic of the Philippines ranks among the world’s major BPO destinations. The sector’s economic influence in the country has tripled in the last ten years. Low labour costs, a highly skilled workforce and competitive ICT infrastructure have provided the major drivers of this growth. While contact centres represent the most important subsector in terms of revenue and employment, higher value added subsectors are also growing. BPO is expected to expand rapidly in the coming years, further strengthening the country’s participation in global supply chains (GSCs). At the same time, it faces numerous challenges related to decent work. A qualitative survey of the industry reveals four key findings: i) a real danger of skills shortages threatens as employers struggle to find correctly trained workers and, once they are hired, to retain them for longer periods; ii) employees report high-stress work environments, with detrimental impacts on health, while HIV/AIDS is increasingly prevalent among BPO workers; iii) more than 50 per cent of workers are women, but they tend to be concentrated in low- paid, low-skilled jobs; and iv) trade union activities are almost non-existent in the BPO sector. This paper i) sheds light on the efforts made by the Government, the BPO sector, employers’ associations and universities to address these challenges, and ii) draws lessons for the future. In general, the paper shows that continued effort in providing stronger voices and representation to workers could do much to address the challenges to decent work creation.
    Keywords: outsourcing, employment creation, economic development, decent work, skills development, women workers, collective bargaining, Philippines
    Date: 2016
  8. By: Rothenberg, Alexander D.; Bazzi, Samuel; Nataraj, Shanthi; Chari, Amalavoyal V.
    Abstract: Throughout the developing world, many countries have created special economic zones to attract investment and spur industrial growth. In some cases, these zones are designed to promote development in poorer regions with limited market access and lower quality infrastructure, an example of a "big push" development strategy. In this paper, we study the effects of Indonesia's Integrated Economic Development Zone (KAPET) program. This program provided substantial tax-breaks for firms that locate in certain districts in the Outer Islands of Indonesia, a country with large regional differences in per-capita income and a history of policies to promote inclusive growth. We find that along many dimensions, KAPET districts experienced no better development outcomes, and in some cases fared even worse, than their non-treated counterparts. If anything, the strongest finding is that firms in KAPET districts paid lower taxes, but these tax reductions neither encouraged greater firm entry, increased migration, nor raised local measures of output or welfare. Overall, the KAPET program does not appear to have achieved the intended outcome of promoting growth in lagging regions. While there are many possible reasons that the KAPET program failed, our findings suggest caution in spending scarce resources to subsidize development in lagging regions.
    JEL: R12 R32 O14
    Date: 2017–02
  9. By: Chan Hang Saing; Harounan Kazianga
    Abstract: We combined household surveys and the intensity of bombing to investigate the long-term impact of U.S. bombing during the 1969-1973 period on education, earnings, health, fertility and marriage in Cambodia. The novelty of this paper consists of the use of the quantity of bombs dropped in each geographic district, which allows the estimation of the effects of the intensity of bombing. Taking into account this intensive margin adds significant insights to using a binary exposure to bombing that has been reported in previous research. We find that one standard deviation increase in the intensity of bombing during 1969-1973 reduced years of schooling by about 0.11-0.23. The e ects for men are larger than those for women. Fertility (total births) increased by 0.20 and age at rst marriage for girls declined by 0.32 year. The reduction in years of education completed do not seem to have a ected earnings, however. Similarly, we did not detect any signi cant e ect on health.
    Date: 2017
  10. By: MONTGOMERY, Evan Braden
    Abstract: T he United States and China are engaged in an intensifying struggle for relative power, geopolitical influence, and positional advantage within East Asia and beyond. The military dimension of this bilateral competition has focused on the effectiveness of US conventional force projection capabilitiesversus the effectiveness of Chinese conventional anti-access and area denial (A2/AD) capabilities. As the back-and-forth between the rivals continues to evolve, emerging technologies such as those associated with the US Third Offset Strategy could significantly change the dynamics. It is difficult, however, to predict which side will gain and which will lose. The brief presents key factors to consider when assessing the long-term effects of these new technologies.
    Keywords: Social and Behavioral Sciences, China, United States, military technology, strategic competition, emerging technologies
    Date: 2017–02–28
  11. By: Zhi Wang (United States International Trade Commission); Shang-Jin Wei (Asia Development bank); Xinding Yu and Kunfu Zhu (University of International Business and Economics)
    Abstract: Since the extent of offshoring and production sharing varies by sector and country, we develop measures of GVCs in terms of length, intensity, and location of participation at the levels of country, country-sector, and bilateral sector, and distinguish among pure domestic, directly traded, and indirectly traded production activities. Using these measures, we characterize cross-country production sharing patterns and GVC related trade activities for 35 sectors and 40 countries over 17 years. We find that the production chain for the world as a whole has become longer. While the relative ranking of the length at the Sector level is stable across countries, the average length for a given country-sector, of both the domestic and international components, and their participation and position in GVCs in general, do evolve significantly over time. The results contribute to a better understanding of features of global value chains and patterns of participation by individual country-sectors.
    Keywords: Production length, Position and Participation in Global Value Chains
    JEL: F1 F6
    Date: 2017–02–23
  12. By: Mundle, Sudipto (National Institute of Public Finance and Policy)
    Abstract: The 2016 India Employment Report demolishes the myths of both `demographic dividend' and `jobless growth' in the India growth story. But it recognises that the growth of decent, productive employment is too slow even to absorb the annual increment of new workers in the workforce, let alone eliminate the huge backlog of open unemployment and low productivity underemployment. This paper argues that this challenge is a man-made problem, the consequence of a range of dysfunctional policies that have a strong anti-employment bias. Moreover, a long standing elitist bias in education policy has pre-empted the provision of quality basic education without which the bulk of the workforce cannot be suitably skilled for decent, productive employment. The paper suggests that these dysfunctional policies are attributable to a fractionalized polity and India's soft state, which stands in sharp contrast to the hard states seen in the dramatically successful East Asian model of guided capitalism.
    Keywords: Growth ; employment ; unemployment ; underemployment ; education ; skill, productivity ; dysfunctional policies ; soft state ; hard state ; India ; East Asia ; guided capitalism
    JEL: O20 O43 O53 O25 P16 P47 P52 I25 I28 J08 J21
    Date: 2017–02
  13. By: Reardon, Thomas
    Abstract: Abstract. This is the first paper showing empirically the share of direct and indirect energy costs in the agrifood supply chains in Asia, or for that matter, in developing countries generally. We show a substantial share of total value chain costs come from energy costs. While the debate has focused on energy costs on the farm, we show that off-farm components of the value chain/food system have a higher share of total energy costs. The energy costs on the farm and off-farm in the food system are correlated with the degree of “transformation” of the value chain and its segments, such as capital intensification and geographic lengthening. While energy costs and food costs are generally correlated in the macro literature, the analysis here allows policymakers to unpack the black box of energy costs in the food sector and ascertain where energy vulnerability challenges are and energy economizing opportunities may best pay off for overall national food security.
    Keywords: supply chains, energy costs, food system transformation, Agribusiness, Industrial Organization, International Development, Marketing, L1, D2, D4, O1, Q1, Q4,
    Date: 2016
  14. By: KEIDA Masayuki; TAKEDA Yosuke
    Abstract: This paper seeks to investigate the linkage between free trade agreements (FTAs) and firms' foreign direct investment (FDI), with a focus on firm size. As small and medium-sized enterprises (SMEs) face relatively higher costs when utilizing FTAs, responses to effective FTAs are expected to vary across firms with different scales. A large-scale database is utilized for making multi-level analyses to this effect. The Poisson regression analysis shows that the intensity to undertake initial FDIs becomes stronger under the existence of an FTA (after controlling for the gravity factors of gross domestic product (GDP) and distance). A multi-level analysis reveals that (1) larger-scale initial FDIs are undertaken in FTA-partner countries; (2) the profit margin of firms established after the coming-into-effect of an FTA tends to be higher; and (3) the profit margin of those firms grouped under the service (non-manufacturing) sector tends to be higher. As for the service sector, the degree of restriction (measured by the Hoekman Index under an FTA) is not statistically significant, while the existence of FTAs is significant. Thus, a sunk cost associated with undertaking FDIs, which is deemed to be rather neutral to the degree of investment regulation, could be a critical factor in the conduct of FDIs. As a policy implication, reduction of such sunk costs (e.g., through information sharing of best practices among potential investors) could be an indispensable policy focus for making FTAs effective in terms of content.
    Date: 2017–02
  15. By: Mundle, Sudipto (National Institute of Public Finance and Policy)
    Abstract: In his book Catch Up, Deepak Nayyar has identified a total of twenty five developing countries (excluding Taiwan) as having the most potential for catching up with the developed countries. This paper speculates about the likely status of these countries, Nayyar's `Next Twenty Five', around the middle of the 21st century. Drawing on his own earlier work on the subject as well as the recent contributions of Acemoglu and Robinson, among others, the author first presents the elements of a theory of economic history as the dynamics of interactions between resource endowments, technology and institutions, mediated by the cumulative impact of incremental change as well as transformative shocks at critical junctures. The prospects of the `Next Twenty Five' are then assessed through the lens of this theoretical framework, recognising that outcomes are probabilistic in a Bayesian sense and not deterministic. Size matters because very large and very small countries have their own specific dynamic. Hence, two very large countries, China and India, and two very small countries, Tunisia and Honduras, are separately analysed. In assessing the prospects of the other twenty one countries in the group, the paper addresses the question of why there is a distinct geographic pattern of the catch up process working more powerfully in Asia as compared to Latin America or Africa.
    Keywords: developing countries ; institutions ; theory of economic history ; China ; India ; Asia ; Africa ; Latin America ; transformative shocks ; critical junctures ; incremental change ; Acemoglu Robinson
    JEL: O43 N10 B52
    Date: 2017–01
  16. By: Michael D. Bordo
    Abstract: This chapter revisits the history of the origins, operation and demise of the Bretton Woods International Monetary System. The Bretton Woods system was created by the !944 Articles of Agreement to design a new international monetary order for the post war at a global conference organized by the US Treasury at the Mount Washington Hotel in Bretton Woods ,New Hampshire at the height of World War II. The Articles represented a compromise between the American plan of Harry Dexter White and the British plan of John Maynard Keynes. The compromise created an adjustable peg system based on the US dollar convertible into gold at $35 per ounce along with capital controls. It was designed to combine the advantages of fixed exchange rates of the pre World War I gold standard with some flexibility to handle large real shocks. The compromise gave members both exchange rate stability and the independence for their monetary authorities to maintain full employment. It took over a decade for the fully current account convertible system to get started. The system only lasted for 12 years from 1959 to 1971 but it did deliver remarkable economic performance. The BWS evolved into a gold dollar standard which depended on the US monetary authorities following sound low inflation policies. As the System evolved it faced the same severe fundamental problems as in the interwar gold exchange standard of: adjustment, confidence and liquidity. The adjustment problem meant that member countries with balance of payments deficits, in the face of nominal rigidities, ran the gauntlet between currency crises and recessions. Surplus countries had to sterilize dollar inflows to prevent inflation. The U.S. as center country faced the Triffin dilemma. With the growth of trade and income member countries held more and more dollars instead of scarce gold as reserves generated by a growing US balance of payments deficit. As outstanding dollar liabilities grew relative to the US monetary gold stock confidence in the dollar would wane raising the likelihood of a run on Fort Knox.This led to the possibility that the US would follow tight financial policies to reduce the deficit thereby starving the rest of the world of needed liquidity leading to global deflation and depression as occurred in the 1930s. Enormous efforts by the US, the G10 and international institutions were devoted to solving this problem. As it turned out, after 1965 the key problem facing the global economy was inflation, not deflation, reflecting expansionary Federal Reserve policies to finance the Vietnam war and the Great Inflation. US inflation was exported through the balance of payments to the surplus countries of Europe and Japan leading them in 1971 to begin converting their outstanding dollar holdings into gold. In reaction President Richard Nixon closed the US gold window ending the BWS.
    JEL: N10
    Date: 2017–02
  17. By: Huber, Florian; Fischer, Manfred M.; Piribauer, Philipp
    Abstract: This paper uses a global vector autoregressive (GVAR) model to analyze the relationship between FDI inflows and output dynamics in a multi-country context. The GVAR model enables us to make two important contributions: First, to model international linkages among a large number of countries, which is a key asset given the diversity of countries involved, and second, to model foreign direct investment and output dynamics jointly. The country-specific small-dimensional vector autoregressive submodels are estimated utilizing a Bayesian version of the model coupled with stochastic search variable selection priors to account for model uncertainty. Using a sample of 15 emerging and advanced economies over the period 1998:Q1 to 2012:Q4, we find that US outbound FDI exerts a positive long-term effect on output. Asian and Latin American economies tend to react faster and also stronger than Western European countries. Forecast error variance decompositions indicate that FDI plays a prominent role in explaining GDP fluctuations, especially in emerging market economies. Our findings provide evidence for policy makers to design macroeconomic policies to attract FDI inflows in the respective countries.
    Keywords: FDI-output relationship, cross-country spillovers, transmission of external shocks, Bayesian global vectorautoregressive model
    Date: 2017–02
  18. By: Florian Huber (Department of Economics, Vienna University of Economics and Business); Manfred M. Fischer (Department of SocioEconomics, Vienna University of Economics and Business); Philipp Piribauer (Oesterreichisches Institut für Wirtschaftsforschung)
    Abstract: This paper uses a global vector autoregressive (GVAR) model to analyze the relationship between FDI inflows and output dynamics in a multi-country context. The GVAR model enables us to make two important contributions: First, to model international linkages among a large number of countries, which is a key asset given the diversity of countries involved, and second, to model foreign direct investment and output dynamics jointly. The country-specific small-dimensional vector autoregressive submodels are estimated utilizing a Bayesian version of the model coupled with stochastic search variable selection priors to account for model uncertainty. Using a sample of 15 emerging and advanced economies over the period 1998:Q1 to 2012:Q4, we find that US outbound FDI exerts a positive long-term effect on output. Asian and Latin American economies tend to react faster and also stronger than Western European countries. Forecast error variance decompositions indicate that FDI plays a prominent role in explaining GDP fluctuations, especially in emerging market economies. Our findings provide evidence for policy makers to design macroeconomic policies to attract FDI inflows in the respective countries.
    Keywords: FDI-output relationship, cross-country spillovers, transmission of external shocks, Bayesian global vectorautoregressive model
    JEL: C30 E52 F41 E32
    Date: 2017–02
  19. By: Frédéric Docquier (FNRS and IRES, Université Catholique de Louvain); Joël Machado (IRES, Université Catholique de Louvain)
    Abstract: This paper provides worldwide projections of population, educational attainment, international migration and income for the 21st century. We develop and parametrize a dynamic, stylized model of the world economy that accounts for the key interdependencies between demographic and economic variables. Our baseline scenario is in line with the ‘high-fertility’ population prospects of the United Nations, assumes constant education and migration policies, long-run absolute convergence in total factor productivity (TFP) between emerging and high-income countries, and the absence of economic takeoff in Africa. It predicts a rise in the income share of Asia (from 38 to 59 percent of the world income) and in the demographic share of Africa (from 10 to 25 percent of the world population). However, over the 21st century, the worldwide proportion of adult migrants will only increase by one percentage point (from 3.5 to 4.5 percent). Half of this change is explained by the increased attractiveness of China and India; and the remaining part is explained by the increased migration pressure from Africa to Western Europe. Keeping its immigration policy unchanged, the 15 members of the European Union will see their average immigration rate increase from 7.5 to 17.2 percent. On the contrary, immigration rates will remain stable in the other high-income countries. Then, we assess the sensitivity of our projections to changes in migration policies, TFP disparities, fertility and education. The evolution of productivity in emerging economies and in Africa will have a drastic impact on the worldwide population size, income disparities and the migration pressure to the European Union. The world economy will also be drastically affected if TFP convergence is accompanied by a fall in migration costs to China and India. However, a large increase in the average European immigration rate is obtained under all the scenarios. More than ever, the management of immigration will become a major societal challenge for Europe.
    Date: 2017–02–23
  20. By: Douglas, R; MacCulloch, Robert
    Abstract: Many nations are seeking to reform their welfare states so that costs to the government can be reduced and the quality of outcomes improved. As a potential way to achieve these aims, there has been a surge of interest in the Singaporean model which features compulsory savings accounts and transparent pricing of health services. It has achieved some of the best health-care outcomes in the world at a cost that is the lowest among high income countries. In this paper we show how tax cuts can be designed to help establish compulsory savings accounts so that a publicly funded welfare system can be changed into one that relies more heavily on private funding in a politically feasible way. To our knowledge, showing how both a tax and welfare reform can be jointly designed to enable this transition to occur has not been done before. Our policy reform creates institutions that have features in common with Singaporean ones, especially for health-care. However there are also key differences. We present a new unified approach to the funding of health, retirement and risk-cover (for events like unemployment) through the establishment of a set of compulsory savings accounts. A case study of New Zealand is used as an illustration. The fiscal impact of our proposed reform on the government???s current and future budgets is reported, as well as its effect on low, middle and high income individuals.
    Date: 2016
  21. By: Mester, Loretta J. (Federal Reserve Bank of Cleveland)
    Abstract: Rather than provide a standard economic outlook talk, I’d like to speak about a challenge that monetary policymakers face in the aftermath of the financial crisis and Great Recession. That challenge is managing expectations. When we think about expectations in the context of monetary policy, we usually mean expectations about inflation or expectations about the future path of policy. But today, what I mean is managing expectations about the role monetary policy can play in promoting a healthy economy. While I’ll focus on the Federal Reserve, I believe a similar challenge applies to central bankers around the world. Of course, the remarks I’ll provide are my own views and not necessarily those of the Federal Reserve System or my colleagues on the Federal Open Market Committee.
    Keywords: Monetary Policy; Guidance; economic growth;
    Date: 2017–02–20

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