Asia

Financial crises, Asian stock indices, and current accounts: An Asian-U.S. comparative study

Journal of Asian Economics - Mon, 07/21/2014 - 21:59
Publication date: Available online 8 July 2014
Source:Journal of Asian Economics

Author(s): David Y. Chen , Tongzhe Li

This paper investigates the effects of financial crises-based exchange rate, real interest rate, and personal consumption expenditure on stock market indices and balances of current account in four Asian countries/areas, and the U.S. from 1997 to 2010. Results obtained from Sims's first-order DSGE representation suggest that two policy variables--changes in the exchange rate and changes in the real interest rate lagged by one quarter--act as stabilizers for contemporaneous changes in stock indices for Thailand, Malaysia, and the U.S., but as destabilizers for Taiwan and Hong Kong. However, changes in personal consumption expenditure lagged by one quarter only play a destabilizing role in Hong Kong. For contemporaneous changes in the current account balance, all three policy variables become destabilizers for all five countries except the one-quarter lagged change in real interest rate, which acts as a stabilizer in Malaysia.





Categories: Asia, Economics

“Flying Geese” in China: The textile and apparel industry's pattern of migration

Journal of Asian Economics - Mon, 07/21/2014 - 21:59
Publication date: Available online 8 July 2014
Source:Journal of Asian Economics

Author(s): Jianqing Ruan , Xiaobo Zhang

China has large regional variations in both factor endowments and levels of economic development. In principle, some industrial enterprises will relocate to the inland regions from the coastal regions to take advantage of lower wage rates and land prices, provided that the regions are different enough. However, few studies have empirically tested whether this kind of “flying geese” pattern of domestic industrial relocation has occurred on the ground or not. Using data from the textile and apparel industry from 1998 to 2011, this paper shows the existence of the “flying geese” pattern of industrial relocation. Data show that before around 2005, the textile and apparel industry was clustered in the eastern region of China, but it has since shifted toward the central and western regions.





Categories: Asia, Economics

Is Devaluation Expansionary or Contractionary: Evidence Based on Vector Autoregression with Sign Restrictions

Journal of Asian Economics - Mon, 07/21/2014 - 21:59
Publication date: Available online 25 April 2014
Source:Journal of Asian Economics

Author(s): Lian An , Gil Kim , Xiaomei Ren

The purpose of the paper is to examine the impact of real exchange rate changes - real devaluation or real depreciation - on outputs in 16 countries that fall within one of the three groups: Latin American countries, Asian countries, and non-G3 developed countries. For the first time in the contractionary devaluation literature, the analysis is based on a Vector Autoregression (VAR) model with sign restrictions method by Uhlig (2005) and Fry and Pagan (2011). The exchange rate shock is identified by imposing restrictions on the signs of impulse responses for a small subset of variables. The findings are as follows: (1) whether output increases after a real devaluation or not has little to do with whether the current account improves or not; (2) Latin American countries are quite homogenous in that the current account generally improves while output decreases after real devaluation; and (3) contractionary devaluation could happen in developed countries as well as in developing countries.





Categories: Asia, Economics

Editorial Board

Journal of Asian Economics - Mon, 07/21/2014 - 21:59
Publication date: April–June 2014
Source:Journal of Asian Economics, Volumes 31–32









Categories: Asia, Economics

Vertical gravity

Journal of Asian Economics - Mon, 07/21/2014 - 21:59
Publication date: April–June 2014
Source:Journal of Asian Economics, Volumes 31–32

Author(s): Douglas H. Brooks , Benno Ferrarini

Vertical gravity deploys as the dependent variable a newly developed indicator of production sharing and processing trade among country pairs. The intensity of this relationship among 73 countries between 1998 and 2005 is assessed in a standard fixed-effects panel setting, with particular focus on trade policy. We find that joint adherence to a preferential trade agreement is associated with a considerably higher degree of processing trade among country pairs, and that such trade is also premised on a lower tariff environment compared to countries that integrate less strongly.





Categories: Asia, Economics

The determinants of income inequality in Thailand: A synthetic cohort analysis

Journal of Asian Economics - Mon, 07/21/2014 - 21:59
Publication date: April–June 2014
Source:Journal of Asian Economics, Volumes 31–32

Author(s): Sasiwimon Warunsiri Paweenawat , Robert McNown

This paper presents tests and estimates of the human capital model of income inequality using synthetic cohort data for Thailand: 1992–2011. The model focuses on four primary determinants of income inequality: mean per capita income levels, the variances in years of education, in the number of children, and in the number of earners in the household. All of these factors are important sources of income inequality in Thailand, with relative impacts that differ across demographic groups and types of household structure. An inverted-U relation between mean per capita income levels and inequality is found, reflecting gender differences of the head of household, differences in household composition, and variation in access to finance. Although the human capital model emphasizes education, estimates presented here show other household characteristics, such as number of children and number of earners, can be even more important sources of inequality.





Categories: Asia, Economics

How much informal credit lending responded to monetary policy in China? The case of Wenzhou

Journal of Asian Economics - Mon, 07/21/2014 - 21:59
Publication date: April–June 2014
Source:Journal of Asian Economics, Volumes 31–32

Author(s): Duo Qin , Zhong Xu , Xuechun Zhang

This study investigates empirically what the major factors are which have driven Wenzhou's informal credit market and how much that market is responsive to monetary policies and the formal banking conditions nationwide. A number of relatively stable factors have been identified from this volatile market through a careful exploration of a monthly survey data set for the period of 2003–2011. The main findings are: (i) Wenzhou's informal credit lending rates are highly receptive to monetary policies; (ii) Wenzhou's market is dominantly demand driven; (iii) Wenzhou's informal lending is substitutive to bank savings in the short run but complementary to banking lending in the long run; and (iv) Wenzhou's market is complementary to excessive investments in the local real estate market.





Categories: Asia, Economics

Substitutes or complements? The interactions between components of capital inflows for Asia

Journal of Asian Economics - Mon, 07/21/2014 - 21:59
Publication date: April–June 2014
Source:Journal of Asian Economics, Volumes 31–32

Author(s): Tony Cavoli

Despite an emerging and interesting literature on the pecking order of capital flows that might arise from asymmetric information and financing constraints, the dynamics of the interactions between the various components of capital flows, namely FDI, portfolio equity, portfolio debt and bank flows appear a little under-researched. This paper presents an empirical examination of this issue for a sample of East Asian countries – looking only at the inflows of capital – by asking the following questions: Are the respective components of capital flows substitutes or complements? Does one type of capital flow enhance or inhibit the others? Is this effect mitigated or exacerbated during crises? What effect does the volatility of each of the components of flows have on the level of each flow? The policy implications of this analysis can be viewed in terms of countries financial liberalisation policies. If two types of flows are substitutes, then a policy of liberalising, or indeed restricting, one type of flow may actually crowd out the other. This may well be an unintended consequence of a country's financial liberalisation policy.





Categories: Asia, Economics

Empirical relationships among money, output and consumer prices in nine Muslim-majority countries

Journal of Asian Economics - Mon, 07/21/2014 - 21:59
Publication date: April–June 2014
Source:Journal of Asian Economics, Volumes 31–32

Author(s): Akhand Akhtar Hossain

This paper highlights the role of price stability in the integrity and sustainability of Islamic banking and finance (IBF) while investigating the sources of inflation and its volatility in nine Muslim-majority countries which have introduced IBF since the late 1970s. The empirical results, obtained by the Engle–Granger, Johansen and autoregressive distributed lag (ARDL) bounds tests with data extending back as far as the 1950s, suggest the presence of those cointegral and causal relations among money, output and prices that are implied by classical monetary theory. Balanced-panel results obtained by analysis of the same data-set over the shorter period 1975–2010 reinforce the results obtained for the individual countries for the varying sample periods.





Categories: Asia, Economics

Interest rate pass-through and monetary policy asymmetry: A journey into the Caucasian black box

Journal of Asian Economics - Mon, 07/21/2014 - 21:59
Publication date: April–June 2014
Source:Journal of Asian Economics, Volumes 31–32

Author(s): Rustam Jamilov , Balázs Égert

This paper analyses the interest rate pass-through for five economies of the Caucasus – Armenia, Azerbaijan, Georgia, Kazakhstan, and Russia. Employing an autoregressive distributed lag (ARDL) specification to monthly data, we find that the interest rate pass-through is systematically incomplete and sluggish, probably due to macroeconomic instability and a low degree of competition in the banking sector. It is not clear whether pass-through has improved over time and asymmetric adjustment is found to characterize the pass-through only occasionally. Overall, our results show a considerable degree of cross-country heterogeneity in the pass-through.





Categories: Asia, Economics

European crises and the Asian economies

Journal of Asian Economics - Mon, 07/21/2014 - 21:59
Publication date: April–June 2014
Source:Journal of Asian Economics, Volumes 31–32

Author(s): Richard Pomfret

This paper analyses the impact of recent financial crises in Europe on the Asian economies. What is often abbreviated to GFC included three distinct crises: the 2007–2008 North Atlantic financial crisis, a 2008–2009 global economic crisis and public finance crises which became increasingly focussed on the eurozone in 2010–2012. Asia did not experience significant financial crises, and the open economies recovered relatively rapidly from the global economic crisis. The relative weight of Asian economies in the global economy, which had been increasing for several decades, grew even more rapidly in 2009–2011 as the economies of the USA and Europe faltered. This poses challenges for global economic governance, although there are constraints on Asia being a more assertive force. Problems in the eurozone hold lessons for Asia; the euro and the Schengenzone are positive responses to the emergence of increasingly complex supply chains. In a similar context, East Asia is moving hesitantly toward financial cooperation and adopting second-best approaches, such as de facto dollar pegs, to reducing bilateral exchange rate volatility.





Categories: Asia, Economics

B.S.MisraRevisiting Regional Growth Dynamics in India in the Post Economic Reforms Period2013Palgrave MacmillanNew Yorkpp. xxi + 265, $100, ISBN: 9781137303677

Journal of Asian Economics - Mon, 07/21/2014 - 21:59
Publication date: April–June 2014
Source:Journal of Asian Economics, Volumes 31–32

Author(s): Angela Oberg







Categories: Asia, Economics

Editorial Board

Journal of Asian Economics - Mon, 07/21/2014 - 21:59
Publication date: February 2014
Source:Journal of Asian Economics, Volume 30









Categories: Asia, Economics

Low-income countries’ linkages to BRICS: Are there growth spillovers?

Journal of Asian Economics - Mon, 07/21/2014 - 21:59
Publication date: February 2014
Source:Journal of Asian Economics, Volume 30

Author(s): Issouf Samake , Yongzheng Yang

This paper employs a global vector autoregression (GVAR) model to investigate business cycle transmission from BRICS (Brazil, Russia, India, China, and South Africa) to LICs through trade, FDI, technology, and exchange rates channels. Trade and financial ties between low-income countries (LICs) and BRICS have expanded rapidly in recent years. This gives rise to the potential for growth to spill over from the latter to the former. The estimation results show that there are indeed significant direct spillovers from BRICS to LICs.





Categories: Asia, Economics

Human capital, technological progress and trade: What explains India's long run growth?

Journal of Asian Economics - Mon, 07/21/2014 - 21:59
Publication date: February 2014
Source:Journal of Asian Economics, Volume 30

Author(s): Rajabrata Banerjee , Saikat Sinha Roy

Using data for the period 1950–2010, this paper seeks to explain the importance of human capital, technological progress, and trade in determining India's long run growth. This paper uses an improved growth accounting framework and ARDL-based co-integration techniques to identify the factors that drive long run productivity growth. The results suggest that both domestic technology capability building and foreign technology spillovers are important forces in determining India's long run growth. Human capital has turned out to be the most important factor. Trade plays a facilitating role by making available frontier technology in an embodied form from the rest-of-the-world. Although the analysis does not explicitly test any endogenous growth models, our findings are consistent with the recent endogenous growth literature.





Categories: Asia, Economics

Inflation and relative price variability: Evidence for India

Journal of Asian Economics - Mon, 07/21/2014 - 21:59
Publication date: February 2014
Source:Journal of Asian Economics, Volume 30

Author(s): Sartaj Rasool Rather , S. Raja Sethu Durai , M. Ramachandran

This study decomposes relative price variability into a component due to inflation and a component due to real factors. The empirical results for India suggest that real factors account for 55% and inflation accounts for 45% of the variability in relative price changes. The proportion of inflation induced relative price variability increases with the rise in inflation, implying that inflation has distortionary effects on the structure of relative prices. Further, larger part of variability in the relative price changes seems to have been generated by fluctuations in the relative prices of a few commodities. The sector wise analysis shows that the major share of total relative price variability is contributed by fluctuations in the prices of manufactured products. The more crucial inference that emerges from the empirical analysis is that the inflation rate at which variability of relative price changes is minimum is found to be 4.5%, which is consistent with the official threshold rate often claimed by the Reserve Bank of India.





Categories: Asia, Economics

Economic consequences of war: Evidence from Sri Lanka

Journal of Asian Economics - Mon, 07/21/2014 - 21:59
Publication date: February 2014
Source:Journal of Asian Economics, Volume 30

Author(s): K. Renuka Ganegodage , Alicia N. Rambaldi

We propose a theoretical and econometric framework to evaluate the impact of war on economic growth of a developing country with an open economy. The theoretical framework encompasses both the neoclassical and endogenous growth models. We test this framework using Sri Lankan data. The war had significant and negative effects both in the short and long-run (annual average of 9% of GDP). High returns from investment in physical capital did not translate in sizable positive externalities. Only short-run significant effects of openness on growth are found. Inconsistent politically driven policies towards openness are the likely reason.





Categories: Asia, Economics

Financial literacy and remittance behavior of skilled and unskilled immigrant groups in Australia

Journal of Asian Economics - Mon, 07/21/2014 - 21:59
Publication date: February 2014
Source:Journal of Asian Economics, Volume 30

Author(s): Wasana Karunarathne , John Gibson

Studies of financial literacy show that many people are poorly prepared for making major financial decisions. One important sub-group rarely examined by financial literacy studies is immigrants, who have specialized financial needs related to remittances. This paper examines variation in financial literacy amongst two actively remitting immigrant groups in Australia – Sri Lankans and Samoans – using surveys designed and supervised by the authors. Paying attention to remittance-related and credit-related literacy, large gaps in the level of financial literacy of the two groups are shown, which are due especially to differences in educational attainment. The wide variation in transactions costs of various remittance channels suggest that many immigrants could save several hundred dollars per year if improved financial literacy helped to produce more efficient remittance choices.





Categories: Asia, Economics

Monetary regime choice in Singapore: Would a Taylor rule outperform exchange-rate management?

Journal of Asian Economics - Mon, 07/21/2014 - 21:59
Publication date: February 2014
Source:Journal of Asian Economics, Volume 30

Author(s): Hwee Kwan Chow , G.C. Lim , Paul D. McNelis

A DSGE–VAR approach was adopted to examine the managed exchange-rate system at work in Singapore and to ask if the country had any reason to fear floating the exchange rate and adopting a Taylor rule. The results showed that, in terms of overall inflation volatility, the exchange rate rule had a comparative advantage over the Taylor rule when export-price shocks were the major sources of real volatility while a Taylor rule was preferable when domestic productivity shocks were dominant. The exchange-rate rule also dominated the Taylor rule for reducing inflation persistence.





Categories: Asia, Economics
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