Asia

ASEAN regional cooperation on competition policy

Journal of Asian Economics - Fri, 12/19/2014 - 16:26
Publication date: December 2014
Source:Journal of Asian Economics, Volume 35

Author(s): Cassey Lee , Yoshifumi Fukunaga

ASEAN member states intend to establish the ASEAN Community by 2015. A key component of this goal is the formation of the ASEAN Economic Community (AEC). The AEC Blueprint was initiated to facilitate and monitor the implementation of the AEC during the period 2008–2015. Competition policy will play an important role in the achievement of the AEC. There has been significant progress in regional cooperation to achieve the competition policy targets listed in the AEC Blueprint. Even though only half of ASEAN member states (AMSs) have implemented competition laws, regional cooperation in this area has been fairly strong. The main emphasis has been on publishing regional guidelines and a handbook on competition policy in ASEAN as well as capacity building activities. There needs to be a renewed impetus to implement national competition laws in AMSs that have not done so. There also remain significant opportunities for enforcement cooperation and pooling of resources for capacity building in competition policy in the region.





Categories: Asia, Economics

Agricultural liberalization, poverty and inequality: Indonesia and Thailand

Journal of Asian Economics - Fri, 12/19/2014 - 16:26
Publication date: December 2014
Source:Journal of Asian Economics, Volume 35

Author(s): Peter Warr

The effects of agricultural and general trade liberalization in Indonesia and Thailand are analyzed and compared using a multi-household, multi-sector integrated general equilibrium framework. In both countries agricultural protection contributes a relatively small part of the total cost of protection because when the protection is removed the gain in welfare is much smaller in the case of agricultural liberalization than across the board liberalization. In both countries the poor, urban and rural, have a strong interest in across the board liberalization of trade policy. The urban poor also have an interest in agricultural trade liberalization, but not the rural poor.





Categories: Asia, Economics

Dynamic estimation of the relationship between trade openness and output growth in Asia

Journal of Asian Economics - Fri, 12/19/2014 - 16:26
Publication date: Available online 22 October 2014
Source:Journal of Asian Economics

Author(s): Sandra Trejos , Gustavo Barboza

This paper studies the relationship between trade openness and output growth for a sample of twenty-three Asian countries using both a static OLS and a dynamic ECM estimation models. At the country specific level, the findings of this study provide robust empirical evidence indicating that higher revealed trade openness is not the main engine explaining the Asian economic-growth miracle. In particular, the authors find that physical capital accumulation is at the core of the observed long-run output per worker growth. At the regional level, the authors observe a marked difference between the pre and post 1997–1998 financial crisis, whereas, in the post period, trade openness has a positive and significant effect on output growth. In general, the results from the dynamic estimations prove that the conventional OLS static estimates underestimate the effect of investment on output growth. In addition, the dynamic model allows for a separation of gains from trade between short term and long term. The paper results also provide evidence in support of the idea that, countries with a growing degree of trade openness may experience faster per-capita output growth through gains in productivity associated to capital accumulation, rather than the assumed technological spillover effects from the trading sector. Again, at the regional level in the post financial crisis period both short term and long term gains from trade are relevant to growth. Why more trade does not necessarily imply faster growth at all levels of revealed trade openness growth, remains a conundrum.





Categories: Asia, Economics

Editorial Board

Journal of Asian Economics - Fri, 12/19/2014 - 16:26
Publication date: October 2014
Source:Journal of Asian Economics, Volume 34









Categories: Asia, Economics

The Indonesian macroeconomy and the yield curve: A dynamic latent factor approach

Journal of Asian Economics - Fri, 12/19/2014 - 16:26
Publication date: October 2014
Source:Journal of Asian Economics, Volume 34

Author(s): Leslie Djuranovik

We develop a fine representation of the term structure of interest rates in Indonesia and create a link between the yield curve and macroeconomic fundamentals. We construct a state-space representation of the yield curve as a function of three time-varying parameters: level, slope, and curvature factors. The model is then expanded to include three macroeconomic variables: real activity, inflation, and interest rates. We find that the dynamic latent factor model provides a very good fit to characterise the Indonesian yield curve in terms of the statistical properties for each maturity, and in terms of the properties of three latent yield-curve factors. With regards to the relationship to the macroeconomy, we find that there is a large amount of idiosyncratic variation in the yield curve movements. Therefore, macroeconomic variables can only explain small dynamics in the yield curve.





Categories: Asia, Economics

Inflation dynamics and monetary policy transmission in Vietnam and emerging Asia

Journal of Asian Economics - Fri, 12/19/2014 - 16:26
Publication date: October 2014
Source:Journal of Asian Economics, Volume 34

Author(s): Rina Bhattacharya

This paper provides an overview of inflation developments in Vietnam in the years following the doi moi reforms, and uses empirical analysis to answer two key questions: (i) what are the key drivers of inflation in Vietnam, and what role does monetary policy play? and (ii) why has inflation in Vietnam been persistently higher than in most other emerging market economies in the region? It focuses on understanding the monetary policy transmission mechanism in Vietnam, and in understanding the extent to which monetary policy can explain why inflation in Vietnam has been higher than in other Asian emerging markets over the past decade.





Categories: Asia, Economics

Is devaluation expansionary or contractionary: Evidence based on vector autoregression with sign restrictions

Journal of Asian Economics - Fri, 12/19/2014 - 16:26
Publication date: October 2014
Source:Journal of Asian Economics, Volume 34

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

Net foreign assets and macroeconomic volatility

Journal of Asian Economics - Fri, 12/19/2014 - 16:26
Publication date: October 2014
Source:Journal of Asian Economics, Volume 34

Author(s): W.M. Chia , Y. Jinjarak , P. Rana , T. Xie

This study analyses the co-movements of net foreign asset accumulation, consumption, real exchange rate, and real interest rate in a cross section of countries. Our sample covers both industrial and developing economies, spanning 1981–2010 period. We find that the accumulation of net foreign assets is associated with increasing consumption and real exchange rate appreciation. In a cross section of countries, when a country increases its net foreign assets to GDP ratio by a one-standard deviation, consumption to GDP increases by 0.02% per year and real exchange rate appreciates by 2% per year. Consumption to GDP responds more positively to net foreign asset accumulation in G7 countries, +0.1 to +0.2% per year, while the response is smaller and negative in developing countries reporting a −0.02% per year. The real exchange rate appreciation, however, is about +3% per year in developing countries and only about +0.2% per year in OECD countries.





Categories: Asia, Economics

Returns to education among entrepreneurs in Bangladesh

Journal of Asian Economics - Fri, 12/19/2014 - 16:26
Publication date: October 2014
Source:Journal of Asian Economics, Volume 34

Author(s): Ivar Kolstad , Arne Wiig , Khondaker Golam Moazzem

This article estimates returns to education among entrepreneurs in Bangladesh, using unique survey data from 2012. Our main instrument for education is the education of the father of the entrepreneur, and we control for sibling education in order to take out the potential effect of father education on productivity and profitability. The results suggest a return to education in the order of 11 per cent per year of education. Using the education of the mother as an alternative instrument, we find evidence of heterogeneous returns to education among entrepreneurs. Compared to our main instrument, the education of mothers appears to affect education choices among individuals with relatively higher participation probabilities in education, where returns to education are lower.





Categories: Asia, Economics

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

Journal of Asian Economics - Fri, 12/19/2014 - 16:26
Publication date: October 2014
Source:Journal of Asian Economics, Volume 34

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 - Fri, 12/19/2014 - 16:26
Publication date: October 2014
Source:Journal of Asian Economics, Volume 34

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

Preference shocks, international frictions, and international business cycles

Journal of Asian Economics - Fri, 12/19/2014 - 16:26
Publication date: October 2014
Source:Journal of Asian Economics, Volume 34

Author(s): Hideaki Hirata

Replicating the degree of cross-country comovements of macroeconomic aggregates, dynamics of prices and quantities of international trade, and the behavior of consumption and labor remains an important challenge in international business cycle literature. This paper incorporates preference shocks into a standard two-country model in which there exist international frictions, such as costs of transportation and restrictions to international asset trade. Country-specific preference shocks that generate fluctuations in each country's consumption and labor solve the puzzles, except for the discrepancy between theory and data regarding international trade variables. The presence or absence of international frictions plays a limited role in solving the puzzles.





Categories: Asia, Economics

Effects of male and female education on economic growth: Some evidence from Asia

Journal of Asian Economics - Fri, 12/19/2014 - 16:26
Publication date: Available online 28 September 2014
Source:Journal of Asian Economics

Author(s): Gazi Hassan , Arusha Cooray

We use extreme bounds analysis (EBA) to examine the comparative growth effects of gender disaggregated and level-specific enrolment ratios in a panel of Asian economies. To test our hypotheses, we employ both endogenous and exogenous growth frameworks. The externality effects of education are positive and robust for both males and females and are relatively large and significant at primary, secondary and tertiary levels. The results are suggestive of a gender productivity gap. Asian economies can grow faster by investing more in female education.





Categories: Asia, Economics

Determinants of inflation in India

Journal of Asian Economics - Fri, 12/19/2014 - 16:26
Publication date: Available online 9 September 2014
Source:Journal of Asian Economics

Author(s): Deepak Mohanty , Joice John

The paper attempts to identify the determinants of inflation in India in a multivariate econometric framework using quarterly data from Q1: 1996–1997 to Q3: 2013–2014. The identified determinants of domestic inflation such as crude oil prices, output gap, fiscal policy and monetary policy, and their relation with inflation is studied in a structural vector auto regression (SVAR) model. Further, the temporal changes in inflation dynamics are analyzed using a time varying parameter SVAR model with stochastic volatility. It was found that inflation dynamics in India have changed over time with various determinants showing significant time variation in the recent years, particularly after the global financial crisis.





Categories: Asia, Economics

Explaining inflation in the period of quantitative easing in Japan: Relative-price changes, aggregate demand, and monetary policy

Journal of Asian Economics - Fri, 12/19/2014 - 16:26
Publication date: Available online 1 September 2014
Source:Journal of Asian Economics

Author(s): Bernd Hayo , Hiroyuki Ono

Concentrating on the period of quantitative easing in Japan, this paper reexamines the correlation between the asymmetry of sectoral relative-price changes and the aggregate inflation rate. This correlation is widely interpreted as evidence that short-run inflation is determined by supply-side factors; however, we study whether, in addition to the inflation rate, monetary policy and aggregate demand explain it. Using producer price index data, we show, first, that the positive and significant effect of relative-price change asymmetries on inflation is not robust with respect to various indicators of asymmetry. Second, using a VAR framework, we find that aggregate demand robustly affects the measures of asymmetries, which raises doubt about whether they can be interpreted as pure supply-side indicators. Third, in addition to the indirect effect via measures of asymmetries, demand directly affects inflation. Thus, we reject the claim that the recent disinflation/deflation period in Japan can be understood as primarily a supply-side phenomenon and suggest that the main driving force was demand, whereas supply and monetary policy were of lesser importance.





Categories: Asia, Economics

Editorial Board

Journal of Asian Economics - Fri, 12/19/2014 - 16:26
Publication date: August 2014
Source:Journal of Asian Economics, Volume 33









Categories: Asia, Economics

Trade liberalization, technology transfer, and firms’ productive performance: The case of Indian manufacturing

Journal of Asian Economics - Fri, 12/19/2014 - 16:26
Publication date: August 2014
Source:Journal of Asian Economics, Volume 33

Author(s): Arup Mitra , Chandan Sharma , Marie-Ange Véganzonès-Varoudakis

India's economic liberalization in the 1990s provides scope for research on the effects of policy reforms on economic performance. This paper examines some of these policy changes and their impact on firms’ productivity and efficiency. We assess, specifically, the role of export and import (total, intermediate, and capital goods) as an outcome of trade liberalization, R&D, technology transfer, and infrastructure endowment over the period 1994–2008. Although our analysis may involve certain biases in capturing the causal relationships, results suggest that infrastructure is a crucial determinant of manufacturing performance in India. This is true for a wide range of variables, such as transport, energy, and information and communication technology (ICT). This finding has important policy implications in the Indian context, as several parts of the country are constrained by severe infrastructure shortages. Other empirical results concern knowledge transfers, which seem to materialize more through exports than imports. Our findings also suggest that R&D is not a productivity-enhancing activity in India and that firms rely more on purchase of foreign technology. This outcome does not come as a surprise because Indian firms are known for low in-house research and limited innovation-oriented activities.





Categories: Asia, Economics

Which firms benefit from foreign direct investment? Empirical evidence from Indonesian manufacturing

Journal of Asian Economics - Fri, 12/19/2014 - 16:26
Publication date: August 2014
Source:Journal of Asian Economics, Volume 33

Author(s): Suyanto , Ruhul Salim , Harry Bloch

Despite growing concern regarding the productivity benefits of foreign direct investment (FDI), very few studies have been conducted on the impact of FDI on firm-level technical efficiency. This study helps fill this gap by empirically examining the spillover effects of FDI on the technical efficiency of Indonesian manufacturing firms. A panel data stochastic production frontier (SPF) method is applied to 3318 firms surveyed over the period 1988–2000. The results reveal evidence of positive FDI spillovers on technical efficiency. Interesting differences emerge however when the samples are divided into two efficiency levels. High-efficiency domestic firms receive negative spillovers, in general, while low-efficiency firms gain positive spillovers. These findings justify the hypothesis of efficiency gaps, that the larger is the efficiency gap between domestic and foreign firms the easier the former extracts spillover benefits from the latter.





Categories: Asia, Economics

Location choice in low-income countries: Evidence from Japanese investments in East Asia

Journal of Asian Economics - Fri, 12/19/2014 - 16:26
Publication date: August 2014
Source:Journal of Asian Economics, Volume 33

Author(s): Kazunobu Hayakawa , Kenmei Tsubota

Unlike most existing studies, this paper examines the location choices of multinational enterprises (MNEs) in low-income countries. Specifically, we investigate the location choices of Japanese MNEs among East Asian developing countries by estimating a four-stage nested logit model and a mixed logit model at the province level. Our findings are as follows. First, Japanese MNEs consider Cambodia, Laos, Myanmar, and Vietnam to be host countries different from China and the forerunners of ASEAN. In other words, for Japanese investors, ASEAN forerunners are countries replaceable by China. Second, the mechanics of vertical FDI are more likely to appear in FDIs in low-income countries. For example, rather than the market size of the host country, tariff rates on products from investing countries are more crucial location elements.





Categories: Asia, Economics

Financial constraints and corporate investment in Asian countries

Journal of Asian Economics - Fri, 12/19/2014 - 16:26
Publication date: August 2014
Source:Journal of Asian Economics, Volume 33

Author(s): Rashid Ameer

This study overcomes the analytic shortcomings of the linear investment models and applies a Panel Smooth Transition Regression model to examine the investment ratios of 519 non-financial listed firms in six Asian countries over the period of 1991–2004. We find that investment-cash flow sensitivities vary across firms in the sample countries. Additionally, our findings also show that investment-cash flow sensitivity has also been affected by the business cycle in these countries. Furthermore, we find new evidence that tangible assets play a significant role in explaining the increase (decrease) in the investment-cash flow sensitivities for South and East Asian countries. These results imply that possession of the tangible assets increases debt capacity, which in turn reduces under-investment. These new findings have significant implications for financing and investment choices of the firms in the sample countries.





Categories: Asia, Economics
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