Indonesia's economic performance in comparative perspective and a new policy framework for 2049

This is the first paper of a planned ‘Indonesia 2049’ project, which asks how far Indonesia's economy will have developed 100 years after actual political independence in 1949. We compare dimensions of Indonesia's economy with those of two oil exporters (Mexico and Nigeria), three large populous developing economies (China, India and Brazil) and three Southeast Asian neighbours (Malaysia, Thailand and the Philippines). Under Soeharto, Indonesia's economic performance was better than it had been under Soekarno, and above the average of the eight comparator countries, but below that of the East Asian economies. Our view is that Susilo Bambang Yudhoyono's second administration must adopt a new economic policy framework to ensure successful transition to knowledge-based growth. This proposed new framework goes beyond the Washington Consensus of ‘getting prices right’ and ‘getting institutions right’ to include ‘getting the role of science right’ and ‘getting the conception of the reform process right’.     

Economic transition and demand pattern: Evidence from China's paper and paperboard industry

In this study, we investigate the demand pattern and structural changes during the economic transformation using data from the paper and paperboard industry in China. Instrumental variable estimations as well as co-integration analysis and error correction models are applied to the analysis. Our results show that in the early stages of economic reform before 1993, the demand did not respond to price changes; while in the later stages, the demand shows significant responses to its own-price and the price of international markets. In particular, since 1992, the own and cross-price elasticity of demand for domestically made paper and paperboard products becomes, respectively, − 0.69 and 0.59, in the range found in some market economies. We also find that imports are substitutes for domestically made paper and paperboard products, but the reverse is not true; and in the later stage of economic transition, the reliance on international market has increased, as reflected by the lower price elasticity of imports.     

International spillovers of U.S. monetary uncertainty and equity market volatility to China’s stock markets

Due to the global economy that is currently being increasingly integrated and liberalized, the cross-country transmission of U.S. monetary policy surprises has become a critical issue attracting scholarly attention. This research thus extends the existing literature by assessing the causal linkages among U.S. monetary policy uncertainty (USMPU), equity market volatility, and China’s stock price index over the period from January 1994 to August 2021. We apply Granger causality in quantile analysis to explore the relationships in each quantile of the distribution in a comprehensible manner. The results indicate that equity market volatility and China’s stock price dynamics play little role in affecting USMPU. We also find that only greater changes in both positive monetary policy uncertainty and stock prices lead to changes in equity market volatility. Furthermore, fluctuations in monetary policy uncertainty and equity market volatility in the United States Granger-cause China’s stock prices. Knowing such causality results could prevent market participants from adopting a one-size-fits-all strategy.     

Limits to Growth in Organic Sales

The price gap between organic and conventional food might explain the low market share of organics in the Netherlands. A real-life experiment was carried out in 2006 in order to determine the price sensitivity of consumer demand for organics. Consumer prices of selected organic products were reduced by up to 40% below current market levels. The price elasticity of demand was low, because not all consumers perceived the price reductions. Moreover, the offer of organic varieties is limited, as is the consumer’s willingness to pay for the social attributes of organics.     

Easing Countries' Transitions From Price Controls and Subsidies

In transitional economies, initial popular support of market reforms is often followed by disillusionment and repudiation of the reform program. To facilitate economic transition, this paper proposes a marketable discount coupon system (DCS) that reassures the public, even as an economy moves from nonmarket to market prices. Unlike price controls, subsidies, or ration coupons, DCS involves no queuing or allocative distortions. Unlike vouchers, DCS would not be negated by inflation. To avoid distortions, discount coupons would be marketable and redeemable, even without purchase of specific products. This procedure permits efficient adjustment of domestic prices to international levels.     

Responding to High Commodity Prices

The recent commodity price boom resulted from rising demand in the face of a long period of low supply growth and market distortions. Structural factors are expected to return international commodity prices to relatively high levels as the global economy recovers. The Asian and Pacific economies and the region's poor will be among the most exposed to a rebound in prices. The recent response to high commodity prices can be improved upon. At the global level, the priority for Asian and Pacific governments is to seek a commitment to lessening distortions favouring bio-fuels. At the regional level, there is a need to address the use of trade restrictions on food commodities in Asia, notably rice. At a national level, the long-term neglect of the rural economy warrants correction; and efforts to expand and make social safety nets more 'market friendly' are called for.     

Commodity Prices, Inflationary Pressures, and Monetary Policy: Evidence from BRICS Economies

We assess the transmission of monetary policy and the impact of fluctuations in commodity prices on the real economy for the five biggest and fastest growing emerging market economies: Brazil, Russia, India, China and South Africa (BRICS). Using modern econometric techniques, we show that a monetary policy contraction has a negative effect on output, suggesting that it can lean against unexpected macroeconomic shocks even when the financial markets are not well-developed in this group of countries. We also uncover the importance of commodity price shocks, which lead to a rise in inflation and demand an aggressive behaviour from central banks towards inflation stabilisation.     

Renminbi internationalisation and China’s financial development

There is a widespread view that China’s currency can be used in international markets only after the liberalisation of China’s domestic financial markets and the opening of its capital account. Yet evidently the renminbi’s internationalisation is preceding these so-called preconditions. This article assesses the tensions inherent in renminbi internationalisation starting at a transitional period in China’s financial development. For now, effective capital controls allow the Chinese authorities to retain regulated deposit and lending rates, quantitative credit guidance and bond market rationing. Relaxation of the capital controls would put these policies at risk. Reserve requirements can be extended to bank inflows from the offshore market but only at a price.     

A three‐gap and macrodecomposition analysis for South Africa, 1993–2002

The South African government is evaluating the economy's performance over its first decade in power. This period can be characterised by a ‘double’ liberalisation: democratisation of the political process going hand in hand with liberalisation of the economy. This article provides a broad overview of the macroeconomic aspects of this liberalisation.     

The emergence of agricultural commodity markets in China

By conscious design, reformers in China only gradually focused their efforts on expanding the role of markets for the allocation of goods and services in the economy. As a result, markets—especially in the agricultural sector—developed slowly. Throughout the 1990s there was a heated debate about the degree to which markets had emerged. The main goal in this paper is to bring together a number of simple and revealing facts on the emergence of China's markets. To do so we examine several sets of price data and analyze spatial patterns of market prices contours over time and text the extent to which market prices are integrated among China's regions. According to our analysis, we find that to a remarkable degree, agricultural commodity markets have emerged; price patterns look much like those in market economies in the rest of the world and prices are highly integrated across space.     

Global commodity prices and global stock market volatility shocks: Effects across countries

We investigate the time-varying dynamics of global stock market volatility, commodity prices, domestic output and consumer prices. We find (i) stock market volatility and commodity price shocks impact each other and the economy in a gradual and endogenous adjustment process, (ii) impact of commodity price shock on global stock market volatility is significant during global financial crises, (iii) effects of global stock market volatility on the US output are amplified by endogenous commodity price responses, (iv) effects of global stock market volatility shocks on the economy are heterogeneous across nations and relatively larger in twelve developed countries, (v) four developing/small economies are more vulnerable to commodity price shocks.     

What can be learned from China’s success?

Since 1978, China has experienced the most rapid economic growth of any country in world history, and the most rapid growth in living standards of any major economy. Following the latest international financial crisis, China outperformed any other major economy – from the second quarter of 2007 to the second quarter of 2014, China’s economy grew by 78% and the USA by 8%. In a single generation, China has gone from a ‘low income economy’ to the verge of achieving ‘high income’ status by World Bank criteria. Achieving this would double the population living in ‘high income’ economies globally. This extremely rapid development is sometimes explained in terms of unique ‘Chinese characteristics’, but research over the last 30 years suggests it is rooted in universal economic processes. While the combination of global forces producing economic growth is unique in China and produces unique ‘Chinese characteristics’, they can operate throughout the world economy. If other developing economies could achieve the scale of China’s economic success, global problems of poverty and its consequences would be solved. China’s policy response to the international financial crisis was far more effective than that of other major economies. This paper examines the chief strategic lessons to be drawn from China’s success.     

International economics of resource productivity – Relevance, measurement, empirical trends, innovation, resource policies

This paper undertakes a step to explaining the international economics of resource productivity. It argues that natural resources are back on the agenda for four reasons: the demand on world markets continues to increase, the environmental constraints to using resources are relevant throughout their whole life cycle, the access to critical metals could become a barrier to the low carbon economy, and uneven patterns of use will probably become a source of resource conflicts. Thus, the issue is also of relevance for the transition to a low carbon economy. ?Material Flow Analysis’ is introduced as a tool to measure the use of natural resources within economies and internationally; such measurement methodology now is being harmonized under OECD auspices. For these reasons, the paper argues that resource productivity—that is the efficiency of using natural resources to produce goods and services in the economy—will become one of the key determinants of economic success and human well-being. An empirical chapter gives evidence on time series of resource productivity increases across a number of economies. Introducing the notion of ‘material flow innovation’, the paper also discusses the innovation dynamics and issues of competitiveness. However, as the paper concludes, market barriers make a case for effective resource policies that should provide incentives for knowledge generation and get the prices right.     

高房价及其对中国经济的影响研究

本文分析了中国当前房价不断走高的原因,特别强调了超宽松的货币政策、房产市场供需失衡、通胀预期、以及土地财政政策四个方面。房价不断走高给中国经济带来很大的负面影响,最后提出了相应的政策建议。     

虚拟经济与中国工业化腾飞

现代市场经济的最突出表现是虚拟经济的增长。如果只是研究实体经济增长,而不研究虚拟经济增长,那么,这种研究就未能做到与社会经济发展同步。虚拟经济具有虚拟性,但虚拟经济同样是一种真实的存在,只不过虚拟经济的真实存在不同于实体经济的真实存在。虚拟经济的这种真实存在集中表现在它与实体经济使用的是同样的货币。正是这同样的货币将实体经济与虚拟经济连接在一起。目前,中国经济的发展已进入工业化腾飞阶段,由于市场机制的作用,出现了激烈的价格上涨,但这并不是通货膨胀,而是必要的和需要理性承受的价格调整,只是这种价格上涨也必然引起货币的急剧贬值。而这种货币贬值既会影响实体经济领域,也会影响虚拟经济领域。就中国的股票市场而言,在人民币不断贬值的前提下,股票的市值需要相应地爬升,而不是跌落,否则,就是市场尚不成熟或出现了较为严重的问题。     

国内油价高涨的主因——基于VAR的实证分析

近年来．国际原油价格强势上扬，国内原油价格也不断上调。尽管一些学者从国内需求增加和国内外原油价格接轨的角度来说明目前原油和成品油的高位，但这些理论似乎都无法完全解释当前油价暴涨的现象。本文从原油和成品油的市场结构和定价机制出发，基于VAK模型证明了国内油价主要为短线预期带动所致．这种预期从国外传递到国内并导致了国内油价的上涨。因此通过改革油品的定价机制且完善和适当干预国内原油期货交易市场，可以打压这种非理性预期，抑制油价飙升的势头。     

Has Greater Competition Restrained U.S. Inflation?

This paper shows how increased goods market competition affects the behavior of inflation in a multisector economy. By raising the price elasticity of demand, increased goods market competition theoretically lowers inflation and makes the aggregate price level less sensitive to aggregate demand shocks. We find that proxies for the aggregate degree of goods market competition are statistically and economically significant in short-run Phillips curve models of core inflation. Evidence indicates that heightened goods market competition has flattened the slope of the short-run, expectations-augmented Phillips curve and slightly lowered the nonaccelerating inflation rate of unemployment (NAIRU).     

Money demand in China and time-varying cointegration

Many studies analyze the money demand using a (fixed coefficient) cointegrating regression model, which may not be appropriate to deal with the money demand of a transition economy like China. This paper investigates this issue using a time-varying cointegration approach based on the quarterly data from 1996 to 2009. We find some interesting results: (i) the estimates of the income elasticities are between 0.60 and 0.75, which are comparable with the previous studies; (ii) the estimated interest rate elasticity supports the argument that the overall effect of the interest rate on the money holding is weak although there are some mild evidences that it has been strengthened in recent years; (iii) the substitution effect of equity asset dominates the wealth effect, especially, during the bullish market period. Our result is robust to the alternative choices of the scale or opportunity cost variables and shows that omission of the stock prices in the money demand function would possibly yield a misspecification problem.     

Does quality differentiation matter in exporters' pricing behaviour? Comparing China and India

The product quality dimension has been rarely mentioned as a factor explaining the heterogeneous pricing strategies of exporters. This could underestimate the degree of mark-up adjustment and the extent of incomplete exchange rate pass-through (ERPT) at a disaggregated level across products and destination markets. This paper investigates the role of quality differentiation in price discrimination using data for China and India's exports disaggregated at the 6-digit product level across destination markets. The paper adopts an empirical approach that incorporates gravity model explanatory factors and allows disentangling the effect of quality on trade prices and volumes from that of other sources of price variation. After excluding short duration export spells, China's export prices denominated in foreign currency terms increase with the yuan's depreciation, implying an increase in exporters' mark-ups, but they decrease as expected in the case of India. However, mark-up increases decline with product quality and destination market income, as the elasticity of demand perceived by exporters increases. These findings remain robust to different measures of quality, samples, specifications, and to the potential endogeneity of quality.     

中国经济体制转型背景下国有企业的改革与发展

国有企业改革的研究需结合中国经济体制转型的特定背景。中国由计划经济体制向市场经济体制过渡采取的是"渐进式"转型模式,事实证明了该模式较其他国家"休克疗法"的完全市场化转型模式具有优越性。由此,文章提出中国经济体制未来的发展模式应是"计划市场体制"。以此为基础,国有企业的改革也经历了由"计划"向"市场"的转变,未来的改革应以计划市场体制为指导原则,在不同类型的国有企业中以不同的方式引入市场竞争因素,营造一个有计划有市场的健康发展的良好格局。