nep-sea New Economics Papers
on South East Asia
Issue of 2017‒05‒14
twenty-two papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Rebooting Philippine Telecommunications Through Structural Reform By Ortiz, Ma. Kristina P.; Serafica, Ramonette B.; Bairan, Jose Carlos Alexis C.
  2. Comprehensive Tax Reform in the Philippines: Principles, History and Recommendations By Renato E. Reside, Jr.; Lee Burns
  3. Human Capital and Shocks: Evidence on Education, Health, and Nutrition By Elizabeth Frankenberg; Duncan Thomas
  4. WASH for child health: Some evidence in support of public intervention in the Philippines By Joseph J. Capuno; Carlos Antonio R. Tan, Jr.; Xylee Javier
  5. Multidimensional Poverty in the Philippines, 2004-13: Do choices for weighting, identification and aggregation matter? By Gaurav Datt
  6. Altruism of Healthcare Workers and Job Satisfaction: Findings from a survey in central Vietnam By Midori MATSUSHIMA; Hiroyuki YAMADA; Yasuharu SHIMAMURA; NGUYEN Minh Tam
  7. Demand for Narcotics in Thailand, with Policy Implications By Sukharomana, Renu; Chang, Chia-Lin
  8. Macro-financial effects of portfolio flows: Malaysia’s experience By Hwa, Tng Boon; Raghavan, Mala; Huey, Teh Tian
  9. Policy landscape of trade in environmental goods and services By Jacob, Arun; Møller, Anders K
  10. Factors associated with the delay in seeking inpatient and outpatient care services in the Philippines By JJ Capuno; AD Kraft; LC Poco; SA Quimbo; CAR Tan, Jr.
  11. Education and pro-family altruistic discrimination against foreigners: Five-country comparisons By Shusaku Sasaki; Naoko Okuyama, Masao Ogaki, and Fumio Ohtake
  12. How important are spillovers from major emerging markets? By Raju Huidrom; M. Ayhan Kose; Franziska Ohnsorge
  13. Rural livelihoods in Mon State: Evidence from a representative household survey: By Filipski, Mateusz J.; Van Asselt, Joanna; Nischan, Ulrike; Belton, Ben; Htoo, Kyan; Win, Myat Thida; Hein, Aung; Kham, L. Seng; Naing, Zaw Min; Payongayong, Ellen; Boughton, Duncan
  14. How Important are Spillovers from Major Emerging Markets? By Raju Huidrom; M. Ayhan Kose; Franziska L. Ohnsorge
  15. Urban and rural fertility transitions in the developing world: a cohort perspective By Mathias Lerch
  16. Memoir: The founding of PIDS By Gerardo P. Sicat
  17. Comparative analysis of Islamic bonds and conventional bonds in the chosen countries By Daniela Majercakova; Ludomir Slahor; Alexandra Mittelman
  18. The Currency Union Effect: A PPML Re-assessment with High-Dimensional Fixed Effects By Larch, Mario; Wanner, Joschka; Yotov, Yoto; Zylkin, Thomas
  19. Top 300 architectural companies and lighting designers By Aurelio Volpe
  20. Competition, Regulation and Institutional Quality By Raul V. Fabella
  21. Long run sustainability of current account balance of China and India: New evidence from combined cointegration test By Sahoo, Manoranjan; Babu, M. Suresh; Dash, Umakant
  22. Government "underspending" in perspective: Incompetence, inertia, or indigestion? By Toby C. Monsod

  1. By: Ortiz, Ma. Kristina P.; Serafica, Ramonette B.; Bairan, Jose Carlos Alexis C.
    Abstract: The quality of the Philippine telecommunication/information and communication technology (ICT) regulatory environment is significantly below what is considered international best practice. Using a scoring system developed by the International Telecommunication Union (ITU), where 100 points represent the best possible scenario, the Philippines is only midway toward the ideal with a score of 52.50––second lowest in a group of seven ASEAN members. A package of structural reforms is needed to improve regulatory quality and support the efficient functioning of ICT markets. While the regulatory regime (or specific rules) and the competition framework are essential elements, they will only work if an effective regulatory authority with the right mandate is in place. Therefore, this should be prioritized in the reform agenda. Last but not least, universal access/service is an important goal that needs to be pursued. We should learn from our own and other countries' experience in crafting a new strategy.
    Keywords: telecommunications, structural reforms, Philippines , infrastructure development, ICT, broadband services, regulatory environment, ITU
    Date: 2017
  2. By: Renato E. Reside, Jr. (School of Economics, University of the Philippines Diliman); Lee Burns (University of Sydney, Australia)
    Abstract: The new Duterte administration is planning to undertake a reform of the country’s tax system. This paper provides a background to options available to the government moving forward, starting with basic principles of taxation, criteria for evaluation, tax instruments and mix of instruments. The background is complemented by a review of the history of past tax reforms in the Philippines, from the end of the Marcos regime to the Aquino administration. The historical and episodic assessment ends with a list of lessons learned from the past. Finally, recommendations are made for both tax policy and tax administration.
    Keywords: tax reform; taxation; Philippines
    JEL: H2 O23
    Date: 2016–09
  3. By: Elizabeth Frankenberg (Duke University); Duncan Thomas (Duke University)
    Abstract: Human capital, including health and nutrition, has played a key role in the literature on poverty traps. Economic shocks that affect human capital during early life are thought to translate into permanently reduced levels of human capital and, thereby, push individuals into poverty. Three potential concerns in this literature are explored with empirical evidence drawn from primary longitudinal survey data collected before and after two major shocks in Indonesia: the 1998 financial crisis and the 2004 Indian Ocean tsunami. First, it is very hard to identify shocks that are unanticipated and uncorrelated with other factors that affect human capital outcomes. Second, and related, there is abundant evidence that individuals, families and communities invest in strategies that are designed to mitigate the impact of such shocks. The nature and effectiveness of the myriad array of these behaviors vary with the context in ways that are not straightforward to measure or model. Third, the impacts of shocks on human capital outcomes in the short and longer-term may differ precisely because of the behavioral changes of individuals and their families so that drawing inferences about the longer-term impacts based on negative impacts in the short term can be very misleading. The picture of remarkable resilience that emerges from investigating the impacts of major shocks on child health and human capital in Indonesia is nothing short of stunning.
    Keywords: Health, poverty traps, natural disaster, resilience, long-term outcomes
    JEL: I10 I20 O10 O15
    Date: 2017–05
  4. By: Joseph J. Capuno (School of Economics, University of the Philippines Diliman); Carlos Antonio R. Tan, Jr. (School of Economics, University of the Philippines Diliman); Xylee Javier (School of Economics, University of the Philippines Diliman)
    Abstract: Like in many developing countries, diarrheal diseases remain a top cause of child mortality and morbidity in the Philippines. Partly to address this problem, the government has undertaken programs to expand access to safe water and sanitation facilities, especially among poor households. To assess the impact of such interventions on child health, we apply propensity score matching technique on the pooled data from the last five rounds of the National Demographic and Health Survey. We find that improved water and improved sanitation each reduced the probability of child diarrhea in 1993-2008 by around two percentage points. In 2013, improved water reduced the probability by about 7 percentage points, while improved sanitation do not seem to have statistically significant effect. These results lend support to the government’s programs to widen access to safe water and sanitation facilities as measures to improve child health.
    Keywords: Water and sanitation; child health; Philippines
    JEL: I12 I18 O53
    Date: 2016–09
  5. By: Gaurav Datt
    Abstract: Multidimensional poverty comparisons can be sensitive to the choice of welfare indicators, the weights assigned to the indicators, as well as the choice of the aggregate poverty measure. This paper examines the robustness of trends in multidimensional poverty in the Philippines to these choices by presenting estimates for three alternative weighting schemes and three alternative measures of multidimensional poverty. Using data from the Annual Poverty Indicators Survey for 2004-13, the paper finds evidence of a significant decline in multidimensional poverty that is robust to these alternatives, though the magnitude of the decline in, and especially the dimensional contributions to, aggregate multidimensional poverty are quite sensitive to the alternatives considered.
    Keywords: multidimensional poverty; weighting; identification and aggregation; Philippines
    JEL: I3 I32 N35
    Date: 2017–04
  6. By: Midori MATSUSHIMA (Faculty of Business Administration, Osaka University of Commerce); Hiroyuki YAMADA (Faculty of Economics, Keio University); Yasuharu SHIMAMURA (Graduate School of International Cooperation Studies, Kobe University); NGUYEN Minh Tam (Hue University of Medicine and Pharmacy)
    Abstract: Despite the value of altruism in this field of work, existing research across the world has not addressed its role in job satisfaction. We conduct quantitative analysis by using data collected from healthcare workers at primary facilities in central Vietnam in 2014, which includes a hypothetical question regarding the "dictator game" to obtain healthcare workers' altruism. The results of a regression analysis show that a higher level of altruism is associated with lower job satisfaction. Further analysis reveals that more altruistic workers have lower satisfaction on healthcare quality they provide at their work in particular. This study contributes to previous knowledge on healthcare workers' satisfaction by observing the role of altruism, which has not been sufficiently examined in previous studies.
    Keywords: altruism; job satisfaction; healthcare workers; Vietnam
    JEL: C12 D64 I12
    Date: 2017–04
  7. By: Sukharomana, Renu; Chang, Chia-Lin
    Abstract: The paper examines the demand for narcotic drugs, based on Becker (1968), as purported rational behavior of human beings. The results from sampling surveys in eight provinces in Thailand in 2014, representing nationwide drug users/addicts, show that the demand for narcotics (amphetamines, ice drug, and marijuana) are price inelastic (between -0.533 and -0.701), as well as normal goods. The key econometric coefficients in models A and B are 0.192 and 0.0467, respectively, and an increase in income will lead to an increase in the demand for narcotics. In addition, factors affecting the demand for narcotics are the age and age squared of the user, friendship, family member relationship, social relationship, reasons for drug use, risk behavior, and expected punishment. Public policy implications are also proposed and analysed.
    Keywords: Price elasticity of demand, Narcotics, Amphetamines, Ice drug, Marijuana, Policy implications.
    JEL: K42 L65 Q21
    Date: 2017–05–12
  8. By: Hwa, Tng Boon (Bank Negara Malaysia); Raghavan, Mala (Tasmanian School of Business & Economics, University of Tasmania); Huey, Teh Tian (Bank Negara Malaysia)
    Abstract: This paper studies the causes and effects of portfolio flows in Malaysia. We use Structural Vector Autoregression (SVAR) and Autoregressive Distributed Lag (ARDL) models to analyse the interactions among portfolio flows, global and domestic macro and financial variables within a common empirical framework. Three findings emerge: First, the SVAR estimations show that global and domestic factors play transitory roles in driving Malaysia’s net portfolio flows. A subsample analysis from the ARDL model highlights that domestic factors play an increasingly important role in attracting portfolio inflows as Malaysia liberalised its exchange rate regime and capital flow restrictions. Second, higher net portfolio flows lead to exchange rate appreciation, higher equity prices and credit expansion. The effects are visible in the exchange rate, followed by equity prices and credit. Third, in the transmission of higher portfolio flows to growth, the positive effects from higher equity prices and credit are partially offset by the dampening effect from the appreciating exchange rate on output. While the contribution of portfolio flow’s effects on output variance is low, the impulse responses of output does change to portfolio flow shocks, suggesting that portfolio flows are tail risks to growth and that the risks magnify when the flows are large and volatile.
    Keywords: international portfolio flows; open economy; financial economics; SVAR model
    JEL: C52 E44 F41 G15
    Date: 2017
  9. By: Jacob, Arun; Møller, Anders K
    Abstract: This paper analyses the trends in trade flows and trade policies in environmental goods (EGs) and related services, with a focus on the Asia-Pacific Economies. The paper finds that the region is a dominant player in both exports and imports of EGs in the world, contributing to 42% and 44%, respectively. Renewable energy related goods dominate both the export and import basket of EGs in the region. The paper warns that even though specific environmental goods in general face very low tariffs, many other goods that are however required for environmental projects still face high tariffs, especially in least developed countries. Hence, the paper calls for a ‘holistic approach’ for tariff liberalization. The paper highlights the role of services in environmental sectors. The paper estimates an augmented gravity model of trade flows that integrates non-tariff measures (NTMs) and services trade restrictions. The estimations find that while tariffs have had an insignificant impact on environmental goods trade, NTMs have a strong negative impact. The impact of NTMs is more strongly felt by exports from low income countries when compared with middle income and high-income ones. The services trade restrictions also have a significant negative impact on the EG trade. The results point to the need for integrating NTMs and service sector policies within the framework of environmental goods negotiations to expedite the process of liberalizing global trade in EG.
    Keywords: Green Trade, Environmental Goods, Trade and Environment
    JEL: Q2 Q27 Q28 Q5 Q56
    Date: 2017–04
  10. By: JJ Capuno (School of Economics, University of the Philippines Diliman); AD Kraft (School of Economics, University of the Philippines Diliman); LC Poco (School of Economics, University of the Philippines Diliman); SA Quimbo (School of Economics, University of the Philippines Diliman); CAR Tan, Jr. (School of Economics, University of the Philippines Diliman)
    Abstract: Despite the country's policies and programs towards universal health care, health is not improving as well as expected, which suggests that households still face significant barriers to their choice of and access to health care, and their timing of use of health services. Using a nationally representative sample of households, we investigate the factors that affect the timing of outpatient care and inpatient care utilization. We define two indicators of delay in seeking care, namely: one for outpatient care, as the number of days from onset of symptom until visit of a clinic or provider, and another for inpatient care, as the number of days from doctor's advice until hospital confinement. Given our dependent variables are measured in terms days until visit, we estimate proportional hazard models (Cox, Weibull and Gompertz) to identify the significant factors associated with delay in seeking health care services. The factors associated with delay are classified in terms of health needs, financial access, physical access, opportunity costs, other household factors and location. Our findings suggest health needs and opportunity costs are the main factors associated with the delay in seeking outpatient and inpatient care services among Filipinos in need of medical attention. Perhaps more importantly from a policy perspective, we also find that physical and financial access variables do not significantly affect timing of care. We draw some implications from the results on increasing access to health care, through improvements in awareness of social health insurance and in the actual quality of health facilities. We also identify directions for future research.
    Keywords: Outpatient care; inpatient care; delay in seeking health care; health care utilization; social health insurance; Philippines
    JEL: I12 D12 I19
    Date: 2017–05
  11. By: Shusaku Sasaki; Naoko Okuyama, Masao Ogaki, and Fumio Ohtake
    Abstract: We measure differences between altruism toward a family member and toward an unknown foreigner using hypothetical questions in internet surveys across five countries: Germany, the US, Singapore, South Korea, and Japan. Our analysis shows that people in all five countries exhibit greater altruistic tendencies toward family members compared to their behavior toward foreigners. However, the degree of discrimination differs across countries. It is lowest in Germany and largest in Japan; the remaining three countries fall within this demarcated range. Further analysis shows that correlation structures between education and altruistic discrimination differ widely. In Germany, people who have spent less time in education exhibit lower altruism toward foreigners compared to toward family members. However, in Japan, South Korea, and Singapore, people with higher education levels tend to discriminate against foreigners. The degree of discrimination is insensitive to the educational background in the US sample.
    Date: 2017–05
  12. By: Raju Huidrom; M. Ayhan Kose; Franziska Ohnsorge
    Abstract: The seven largest emerging market economies - China, India, Brazil, Russia, Mexico, Indonesia, and Turkey - constituted more than one-quarter of global output and more than half of global output growth during 2010-15. These emerging markets, which we call EM7, are also closely integrated with other countries, especially with other emerging and frontier markets. Given their size and integration, growth in EM7 could have significant cross-border spillovers. We provide empirical estimates of these spillovers using a Bayesian vector autoregression model. We report three main results. First, spillovers from EM7 are sizeable: a 1 percentage point increase in EM7 growth is associated with a 0.9 percentage point increase in growth in other emerging and frontier markets and a 0.6 percentage point increase in world growth at the end of three years. Second, sizeable as they are, spillovers from EM7 are still smaller than those from G7 countries (Group of Seven of advanced economies). Specifically, growth in other emerging and frontier markets, and the global economy would increase by one-half to three times more due to a similarly sized increase in G7 growth. Third, among the EM7, spillovers from China are the largest and permeate globally.
    Keywords: Business cycles, spillovers, external shocks, China, EM7, G7
    JEL: E32 F20 F42
    Date: 2017–05
  13. By: Filipski, Mateusz J.; Van Asselt, Joanna; Nischan, Ulrike; Belton, Ben; Htoo, Kyan; Win, Myat Thida; Hein, Aung; Kham, L. Seng; Naing, Zaw Min; Payongayong, Ellen; Boughton, Duncan
    Abstract: The purpose of this report is to provide information and analysis to government, civil society, and donors interested in improving the well-being of the rural population of Mon State, Myanmar. Specifically, the report analyzes the different sources of income for rural households, as well as their socioeconomic characteristics, with a view to helping identify constraints on growth and potential pathways to improving incomes. The overall picture that emerges is one of a struggling agricultural sector and an economy heavily dependent on services for local employment and on international migration for income. The analysis is based on a sample of 1,632 rural households, designed to be representative of rural households in Mon State as a whole. The survey included a household questionnaire and a community survey, and gathered information on demographics, all economic aspects of the household, and access to infrastructure and services at the community level.
    Keywords: agricultural development; rice; rubber; migration; households; livelihoods; income; off farm wages; fisheries; infrastructure
    Date: 2017
  14. By: Raju Huidrom (WorldBank, Development Prospects Group); M. Ayhan Kose (WorldBank, Development Prospects Group; Brookings Institution; CEPR, and CAMA); Franziska L. Ohnsorge (WorldBank, Development Prospects Group; CAMA)
    Abstract: The seven largest emerging market economies China, India, Brazil, Russia, Mexico, Indonesia, and Turkey constituted more than one-quarter of global output and more than half of global output growth during 2010-15.These emerging markets, which we call EM7,are also closely integrated with other countries, especially with other emerging and frontier markets. Given their size and integration, growth in EM7 could have significant cross-border spillovers. We provide empirical estimates of these spillovers using a Bayesian vector auto regression model. We report three main results. First, spillovers from EM7 are sizeable: a 1 percentage point increase in EM7 growth is associated with a 0.9 percentage point increase in growth in other emerging and frontier markets and a 0.6 percentage point increase in world growth at the end of three years. Second, sizeable as they are, spillovers from EM7 are still smaller than those from G7 countries (Group of Seven of advanced economies). Specifically, growth in other emerging and frontier markets, and the global economy would increase by one-half to three times more due to a similarly sized increase in G7 growth. Third, among the EM7, spillovers from China are the largest and permeate globally.
    Keywords: Business cycles; spillovers; external shocks; China; EM7; G7.
    JEL: E32 F20 F42
    Date: 2017–05
  15. By: Mathias Lerch (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Although the role of urbanization in fertility decline remains debated, few studies have assessed long-term fertility trends by urban/rural place of residence. Relying on successive surveys for 55 countries, we analyze the diffusion of cohort fertility decline in urban and rural areas across Africa, Asia and Latin America and the Caribbean. We show that, once the fertility transition is initiated, the decline in urban areas is similarly fast in all three continents. The pattern of the urban-to-rural diffusion of birth limitation, however, has differed significantly. In Latin American and Caribbean countries, the evolution in the rural-urban fertility differentials followed an inverted U-shaped pattern over the fertility transition. In Asia, the differences remained more limited, because of a parallel decline in fertility by type of place of residence, whereas in Africa they increased monotonically because rural areas have not yet experienced significant fertility declines. The implications of these results for urban population projections and for our understanding of the international variations in the pace of fertility transition are discussed.
    JEL: J1 Z0
    Date: 2017–05
  16. By: Gerardo P. Sicat (School of Economics, University of the Philippines Diliman)
    Abstract: The Philippine Institute for Development Studies (PIDS), founded in 1977, has gained international recognition for useful research on development issues relevant to the nation's economic needs. In this memoir prepared for the 40th anniversary celebration of the institute's birth, the author recounts the unique circumstances, philosophy and other factors that led to the founding of the research institute.
    Keywords: Philippine economy; economic development; research institutions
    JEL: A11
    Date: 2017–02
  17. By: Daniela Majercakova (Comenius University in Bratislava, Faculty of Management FM CU); Ludomir Slahor (Comenius University in Bratislava, Faculty of Management FM CU); Alexandra Mittelman (Comenius University in Bratislava, Faculty of Management FM CU)
    Abstract: Islamic bonds can be marked as one of the most succesful instruments of the Islamic financial sector, which is possible to define briefly as the attempt to connect the religious principles and financial entrepreneurship. At the beginning, Islamic bonds had the character of the specific instrument, that appeared occasionally at some local markets. By the time, Islamic bonds gained bigger and bigger market share. Nowadays, the market sukuk, has the raising number of foreign investors from banks and corporations. The organization AAOIFI defines sukuk as the certificates of the similar value, which, after the final underwriting, authorize to accept the nominal value of certificates and its usage for the planned investments to tangible assets, rights and services or to the sufficient capital for projects or other investment activities. Another point that puts the accent on the knowledge of this instrument is the increasing population of muslim citizens in the european countries, what creates the basic assumptions for the growing demand for the instruments of islamic financial products, the need for the knowledge of the basic and also more detailed approaches and the philosophy of this financial market. On the other hand, this segment is obstructed by a number of problematic factors which restrict remarkably the future possible development.The aim of this paper is to specify more closely the features of Islamic bonds (sukuk) and to perform on this theoretical basis the comparative analysis with the conventional bonds. For their comparison, we are going to use the calculations of the value at risk. The data used with the comparison consist of the monthly prices of the public and company sukuk and bonds taken from he database Bloomberg. Although the weekly prices are more exact in substituing the market prices, where the position of the portfolio can be liquid, despite of this fact, we used the monthly prices because of the restriction of availability of the daily time chains in the case of sukuk. We also had the limited number of countries, regarding the fact that the trading with sukuk is on the primary market in the majority of cases restricted. That is why we have chosen United Arab Emirates (Dubai) and Malaysia, as the countries from which we have chosen public and company sukuk and bonds for their analysis and comparison.
    Keywords: bond, sukuk, Value at Risk, factor
    JEL: G15 G24
    Date: 2017–04
  18. By: Larch, Mario (University of Bayreuth); Wanner, Joschka (University of Bayreuth); Yotov, Yoto (School of Economics Drexel University); Zylkin, Thomas (National University of Singapore)
    Abstract: Recent work on the effects of currency unions (CUs) on trade stresses the importance of using many countries and years in order to obtain reliable estimates. However, for large samples, computational issues limit choice of estimator, leaving an important methodological gap. To address this gap, we unveil an iterative PPML estimator, which flexibly accounts for multilateral resistance, pair-specific heterogeneity, and correlated errors across countries and time. When applied to a comprehensive sample with more than 200 countries trading over 65 years, these innovations flip the conclusions of an otherwise rigorously-specified linear model. Our estimates for both the overall CU effect and the Euro effect specifically are economically small and statistically insignificant. The effect of non-Euro CUs, however, is large and significant. Notably, linear and PPML estimates of the Euro effect increasingly diverge as the sample size grows.
    Keywords: Currency Unions; PPML; High-dimensional Fixed Effects
    JEL: C13 C21 F10 F15 F33
    Date: 2017–04–29
  19. By: Aurelio Volpe (CSIL Centre for Industrial Studies)
    Abstract: The aim of this Report is to profile, through targeted short descriptions, around 200 top Architectural Offices and about 100 Lighting Designers, both primarily specialised in the lighting category and that have not lighting as their primarily focus, but that engage frequently in designing luminaires. Where relevant, projects samples and co-operational activities have been highlighted. Mentioned companies are focused both on turnkey projects and small projects in the segments of hospitality (four and five stars hotels), luxury retail, office space, art and museums, high-end residential, entertainment. Data are usually introduced in half a page, as follows: Company name, Headquarter, Website, Main branches, Lighting partners, Recent projects, Projects in progress, Category, Size, Short history. Geographical areas covered: Europe, America, Asia and Pacific.
    JEL: L15 L22 L25
    Date: 2017–03
  20. By: Raul V. Fabella (School of Economics, University of the Philippines Diliman; National Academy of Science and Technology)
    Abstract: Regulation and competition policy are two alternative modalities by which the state intervenes in the market. In order for either to deliver welfare gains, there must first be a pre-existing market failure. We first present different varieties of market failures and identify those for which regulation is best address (cooperation failures such as The Fishing Game and the Public Goods Game, scale economies-based failures such as a Natural Monopoly and Meta-Market Failures) and those where competition policy works better (market power-based failures such as an artificial monopoly or cartel). We also discuss those market failures which cannot be remedied by an imperfect state. We show graphically the welfare outcomes of various industrial organizations (monopoly, duopoly, Walrasian limit) under the symmetric Cournot competition. We also deal with the welfare implications of imperfect substitutability. We then discuss some welfare implications of the Bertrand competition, its effect on innovation and on the formation of "trusts". We present reasons why competition policy is better than regulation in jurisdictions where institutions are weak. The reasons are: information intensity and asymmetry being greater with regulation, the greater ease of capture of the organs of regulation and, finally, the presence of private players who serve as allies of the competition agency and help monitor abuse of market power.
    Keywords: competition policy; regulation; weak institutions; market failures; Cournot competition; Bertrand competition
    JEL: K21 L51 L41 L44
    Date: 2017–03
  21. By: Sahoo, Manoranjan; Babu, M. Suresh; Dash, Umakant
    Abstract: This paper investigates the long run sustainability of current account balance (CAB) in two fast growing emerging economies of Asia, China and India, using annual data from 1980 to 2014. Sustainability of current account balance is analyzed by examining the long run equilibrium relationship between exports and imports of goods and services. We use the Bayer-Hanck (2013) combined cointegration test to examine the long run relationship between exports and imports. The results indicate that while China has a sustainable current account balance, India’s current account balance is not sustainable in the long run. Therefore, in terms of maintaining the growth momentum, India has to enhance the rate of growth of its exports while China has to maintain high levels of export growth, even in an era of sluggish global demand.
    Keywords: Current account deficit Sustainability Intertemporal budget constraint
    JEL: F41
    Date: 2016
  22. By: Toby C. Monsod (School of Economics, University of the Philippines Diliman)
    Abstract: The measured underspending over the last 5 years has more to do with ambitious targets rather than apathetic or incompetent bureaucrats: while actual disbursements fell short of planned disbursements by about ten percent per year from 2011 to 2015, real per capita disbursements on capital outlays and maintenance and operating expenses increased relative to levels in 1999 to 2010 by an average of 41.6 and 76.8 percent respectively. The bureaucracy was unable to keep up with its own ambitions because of absorptive capacity constraints which were driven in part by the inertia from three decades of maneuvering in tight fiscal space as well as coordination problems and other structural bottlenecks, some of which have long-attended budget and plan design and execution but have not been recognized as binding constraints until now. The fund absorption problem is not uniform across agencies however indicating more fundamental organizational issues in certain sectors, and the need for actions beyond public finance management reforms to optimize the contribution of fiscal spending to inclusive growth.
    Date: 2016–12

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