Asia

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

Journal of Asian Economics - 5 hours 40 min ago
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 - 5 hours 40 min ago
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 - 5 hours 40 min ago
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 - 5 hours 40 min ago
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 - 5 hours 40 min ago
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

European crises and the Asian economies

Journal of Asian Economics - 5 hours 40 min ago
Publication date: Available online 15 January 2014
Source:Journal of Asian Economics

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

Editorial Board

Journal of Asian Economics - 5 hours 40 min ago
Publication date: December 2013
Source:Journal of Asian Economics, Volume 29









Categories: Asia, Economics

A note on detecting biases in assessing the use of FTAs

Journal of Asian Economics - 5 hours 40 min ago
Publication date: December 2013
Source:Journal of Asian Economics, Volume 29

Author(s): Shintaro Hamanaka

There has been much confusion, rather than debate, on the use of free trade agreements (FTAs). Unfortunately, a large part of the confusion is caused by the absence of consensus on the meaning of key terms such as the “utilization rate” and “usage rate” of FTAs, and the lack of knowledge on upward or downward biases from various data sources regarding the use of FTAs. Rather than making an original empirical contribution, this article reviews existing studies and attempts to identify the relevant methodologies for assessing the use of FTAs.





Categories: Asia, Economics

Regional disparity, transitional dynamics and convergence in China

Journal of Asian Economics - 5 hours 40 min ago
Publication date: December 2013
Source:Journal of Asian Economics, Volume 29

Author(s): Tsun Se Cheong , Yanrui Wu

Most of the earlier studies on the convergence of income in China are based on provincial level data with a few papers focusing on intra-provincial units’ transitional dynamics. The objective of this study is to fill the void in the literature by using county-level data which cover 1485 counties and county-level cities in 22 provinces for the period of 1997–2007. This paper makes several contributions to the literature. The findings in this paper show high persistence in income distribution among many spatial groupings. Thus the poor county-level units may remain relatively poor over time. This study provides very little evidence of convergence to the mean income in various spatial groupings. Furthermore, the empirical analysis highlights differences in transitional dynamics between cities and counties.





Categories: Asia, Economics

Trade liberalisation and manufacturing wage premiums: Evidence from Thailand

Journal of Asian Economics - 5 hours 40 min ago
Publication date: December 2013
Source:Journal of Asian Economics, Volume 29

Author(s): Kankesu Jayanthakumaran , Piyapong Sangkaew , Martin O’Brien

This paper investigates trade related industrial wage premiums. The procedure involves (1) estimating industrial wage premiums and (2) linking those estimated wage premiums to trade related variables. Results reveal that (1) in addition to workers’ characteristics, industry characteristics where workers are employed were important in determining the wages for workers, (2) falling output tariffs resulted in increased wage premiums, and (3) an increase in intermediate imports exerted a strong positive influence on wage premiums. Linked employer and employee micro data may provide further insights which are currently not available.





Categories: Asia, Economics

An empirical analysis of China's equilibrium exchange rate: A co-integration approach

Journal of Asian Economics - 5 hours 40 min ago
Publication date: December 2013
Source:Journal of Asian Economics, Volume 29

Author(s): Christopher Gan , Bert Ward , Su Ting Ting , David A. Cohen

This paper estimates time specific values for China's long-run equilibrium exchange rate and develops measures of the direction and extent of misalignment based on a reduced-form real effective exchange rate (REER) model. An appropriately specified long-run equilibrium model is estimated and tested following Johansen and Juselius (1990) procedures, which is then used to construct an estimated time path for long-run equilibrium exchange rate values. Unit root tests indicated that each series can be considered as I(1) and that there was one cointegrating relationship linking the RMB series with its “fundamentals” – openness, money supply, productivity and government spending – with long-run elasticities of (0.41), (0.97), (0.51) and (0.75), respectively. The estimated error-correction model of REER determination showed that during China's latest exchange rate regime (from 2005:Q3) the RMB was undervalued by an average of 6.7 percent, which is modest compared to related studies. Estimation of the associated short-run error correction model shows that the error correction term has a statistically significant value of 0.85, implying that the actual real effective exchange rates would converge relatively quickly (just over one quarter, on average) towards their long-run equilibrium level in the absence of central bank intervention.





Categories: Asia, Economics

Can Asia sustain an export-led growth strategy in the aftermath of the global crisis? Exploring a neglected aspect

Journal of Asian Economics - 5 hours 40 min ago
Publication date: December 2013
Source:Journal of Asian Economics, Volume 29

Author(s): Gonzalo Hernandez Jimenez , Arslan Razmi

Employing panel data for Asian countries to distinguish between different kinds of export- and tradable-led growth, we find that the proportion of a country's manufactured exports that is destined for industrialized countries, a variable largely ignored by existing studies, is robustly associated with growth. This finding has crucial implications given the expected deceleration of industrialized country import growth in the coming years. Most importantly, and contrary to some recent studies, prospects for continued growth, now centered on domestic tradable consumption or on developing countries as markets, may be limited. South–South trade may not be a good substitute for South–North trade.





Categories: Asia, Economics

Sources of spatial welfare disparities in Indonesia: Household endowments or returns?

Journal of Asian Economics - 5 hours 40 min ago
Publication date: December 2013
Source:Journal of Asian Economics, Volume 29

Author(s): Emmanuel Skoufias , Sergio Olivieri

This article investigates (i) the extent to which the differences in the standard of living among districts in Indonesia are due to differences in the marginal welfare gains (returns) associated with household mobile endowments or differences in household endowments themselves; and (ii) whether the current allocation of fiscal expenditures by the central authorities is related to the main determinants of the spatial disparities in welfare among districts. Differences in the returns to household mobile characteristics are found to be the primary explanation of the welfare differences. The allocation of fiscal transfers to districts is found to be based on “needs” defined as low returns to household mobile endowments. This also suggests that the design of the fiscal transfer system is consistent with promoting the opportunities for welfare across districts as opposed to equalizing the level of welfare itself. Finally, the marginal welfare gains of most household mobile endowments are found to be higher in districts with more roads.





Categories: Asia, Economics

The determinants of Australian household debt: A macro level study

Journal of Asian Economics - 5 hours 40 min ago
Publication date: December 2013
Source:Journal of Asian Economics, Volume 29

Author(s): Xianming Meng , Nam T. Hoang , Mahinda Siriwardana

This paper employs a cointegrated Vector Autoregression (CVAR) model to explore the determinants of Australian household debt. The results show that housing prices, GDP and the population in the economy have a positive effect on household borrowing. Meanwhile, interest rates, the unemployment rate, the number of new dwellings and inflation are found to have a negative effect on Australian household debt. Of these, interest rates are the most significant. Based on these results, it is judicious to rein in household debt during economic booms through monitoring and intervening in the assets market and using monetary policy in a timely, comprehensive, and careful manner.





Categories: Asia, Economics

Bank opacity, intermediation cost and globalization: Evidence from a sample of publicly traded banks in Asia

Journal of Asian Economics - 5 hours 40 min ago
Publication date: December 2013
Source:Journal of Asian Economics, Volume 29

Author(s): Wahyoe Soedarmono , Amine Tarazi

This paper examines the relationship between opacity and the cost of intermediation in Asian banks. Using a sample of publicly traded commercial banks from 2002 to 2008, our empirical results show that higher opacity is associated with a lower intermediation cost in banking. Hence, bank managers in their efforts to overcome asymmetric information issues and to improve transparency tend to offset the higher cost of acquiring and disclosing information by increasing the cost of intermediation for entrepreneurs. Moreover, a deeper look at the country level indicates that the negative link between opacity and the cost of intermediation is reversed as globalization increases. Greater globalization therefore outweighs managerial entrenchment behavior to preserve bank opacity. Our findings highlight that bank opacity issues are even more costly in countries with higher globalization.





Categories: Asia, Economics

Family size, household shocks and chronic and transient poverty in the Philippines

Journal of Asian Economics - 5 hours 40 min ago
Publication date: December 2013
Source:Journal of Asian Economics, Volume 29

Author(s): Connie Bayudan-Dacuycuy , Joseph Anthony Lim

This research is one of the few attempts to analyze chronic and transient poverty in the Philippines. Results indicate that poverty in the Philippines is largely comprised of chronic poverty with households in rural areas and Mindanao regions being the most affected. Using quantile regressions, results show that both chronic and transient poverty are affected by negative shocks to households. Shocks in the labor market such as job loss or income reduction affect chronic poverty while natural disasters such as droughts affect transient poverty. Results also indicate that a higher dependency burden due to a large number of younger children positively affects chronic poverty but not transient poverty. Policy suggestions to lower both types of poverty in the Philippine context are provided.





Categories: Asia, Economics

Editorial Board

Journal of Asian Economics - 5 hours 40 min ago
Publication date: October 2013
Source:Journal of Asian Economics, Volume 28









Categories: Asia, Economics

Econometrics of financial markets in Asia

Journal of Asian Economics - 5 hours 40 min ago
Publication date: October 2013
Source:Journal of Asian Economics, Volume 28

Author(s): Paresh Kumar Narayan







Categories: Asia, Economics

On the implementation and use of factor-augmented regressions in panel data

Journal of Asian Economics - 5 hours 40 min ago
Publication date: October 2013
Source:Journal of Asian Economics, Volume 28

Author(s): Joakim Westerlund , Jean-Pierre Urbain

Practitioners are generally well aware of the fact that most standard approaches for estimation and inference in panel data regressions are based on assuming that the cross-sectional units are independent of each other, an assumption that is surely mistaken in applications, especially in macroeconomics and finance. Yet, applications involving anything but these standard approaches are very rare. The current paper can be seen as a reaction to this. The purpose is to point to some of the recent advances in the area of factor-augmented panel regressions, and to also provide some guidance regarding their implementation.
Highlights ► Most applications involving panel data regressions are based on OLS. ► Yet, OLS is known not to be robust to cross-section dependence. ► This paper point to some of the recent advances in the area of factor-augmented panel regressions. ► The implementation of these novel approaches is given a detailed treatment.




Categories: Asia, Economics

Simple unit root testing in generally trending data with an application to precious metal prices in Asia

Journal of Asian Economics - 5 hours 40 min ago
Publication date: October 2013
Source:Journal of Asian Economics, Volume 28

Author(s): Joakim Westerlund

This paper proposes a new unit root test that is general enough to accommodate a potentially non-linear deterministic trend function, making it one of the most general tests around. However, the main advantage lies with its simple implementation. In particular, the asymptotic critical values are shown to be “almost” independent of the deterministic trend function, and as a result the test can be implemented without the need for model-specific critical values. The new test is applied to a sample consisting of monthly prices of four precious metals for a number of Asian countries.





Categories: Asia, Economics
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