Asia

Explaining Inflation in the Period of Quantitative Easing in Japan: Relative-Price Changes, Aggregate Demand, and Monetary Policy

Journal of Asian Economics - Mon, 09/01/2014 - 23:51
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 - Mon, 09/01/2014 - 23:51
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 - Mon, 09/01/2014 - 23:51
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 - Mon, 09/01/2014 - 23:51
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 - Mon, 09/01/2014 - 23:51
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 - Mon, 09/01/2014 - 23:51
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

Trade openness and household welfare within a country: A microeconomic analysis of Vietnamese households

Journal of Asian Economics - Mon, 09/01/2014 - 23:51
Publication date: August 2014
Source:Journal of Asian Economics, Volume 33

Author(s): Minh Son Le

The positive effects of trade liberalisation on several dimensions of poverty have initiated studies of the trade–poverty relationship. Trade liberalisation accompanies institutional reforms that help to reduce institutional barriers against the poor. This study examines the impacts of trade openness and institutional reforms on rural household welfare at the provincial level through the analysis of the determinants of welfare of rural households in Vietnam. The study employs a model of micro-determinants of growth and tests it on the data from the Vietnam Household Living Standards Surveys (VHLSSs) of 2006 and 2010. What makes the study different from some other studies of the same vein is that it attempts to directly capture the institutional effect on welfare. The study finds that, in the provinces with high institutional reforms and trade openness, the welfare of rural households improved. Institutional reforms in Vietnam appeared to be sluggish in the late 2000s. In particular, both access to land and lower informal charges were the important determinants of welfare improvement over time. These findings suggest that Vietnam should maintain its development by accelerating the process of institutional reforms, thereby helping poor households to improve standards of living.





Categories: Asia, Economics

Editorial Board

Journal of Asian Economics - Mon, 09/01/2014 - 23:51
Publication date: April–June 2014
Source:Journal of Asian Economics, Volumes 31–32









Categories: Asia, Economics

Vertical gravity

Journal of Asian Economics - Mon, 09/01/2014 - 23:51
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, 09/01/2014 - 23:51
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, 09/01/2014 - 23:51
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, 09/01/2014 - 23:51
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, 09/01/2014 - 23:51
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, 09/01/2014 - 23:51
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, 09/01/2014 - 23:51
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, 09/01/2014 - 23:51
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, 09/01/2014 - 23:51
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, 09/01/2014 - 23:51
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, 09/01/2014 - 23:51
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
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