Optimum currency area theory: evidence from post-Soviet countries and implications for Eurasian Economic Union

In this article the theory of optimum currency area is applied to post-Soviet and other selected countries. The study finds smaller exchange rate variability when the economies are closely linked by bilateral trade, are subject to similar shocks both on aggregate and at the industry level, have similar inflation rates, are open and smaller in economic size, and have higher labour migration as proxied by remittance flows. The estimation results also substantiate that the US dollar plays a dominant role as an anchor currency. Next, the study shows that economic fundamentals suggest limited prospects of a common currency for post-Soviet countries, particularly for the Eurasian Economic Union (EAEU). It is also found that Moldova, among the post-Soviet countries, better approximates an optimum currency area with Russia. Further, when the government debt-to-GDP ratio is taken into account, only Kazakhstan from the EAEU member countries stands out as having positive prospects for forming a common currency area with Russia.     

Monetary union in Latin America: an assessment in the context of optimum currency area

The article applies the optimum currency area (OCA) theory to Latin America to assess the potential of a monetary union in Latin America and in its major existing regional trade agreements (RTAs). According to OCA criteria we find that Latin America is far from being an optimum currency area, as its countries’ exposure to asymmetric shocks is high and their capacities to adjust in response to macroeconomic disturbances are limited. Using a panel of 20 Latin American countries from 1990 to 2014, we apply the dynamic OLS estimation techniques to estimate the costs and benefits of a potential monetary union in Latin America and in its various RTAs. to estimate the costs and benefits of a potential monetary union in Latin America and in its various RTAs. We find that the costs are high, because Latin America’s economies are vulnerable to severe macroeconomic disturbances and its RTAs differ significantly in their response to negative demand shocks. Most of the monetary efficiency gains are shown to be the result of a common restrictive monetary policy which would result in higher FDI inflows and, to a more limited extent, increased GDP, both overall and per capita. Although Central American countries are shown to be most suitable for further monetary integration, we conclude that Latin American countries should head first towards greater economic and political integration.     

Cereal production,undernourishment, and food insecurity in South Asia

South Asia remains one of the major strongholds of hunger in the world, despite the fact that, following the Green Revolution, cereal production in the countries of this region tripled during the second half of the 20th century. This study examines the role played by this increase in cereal production in improving the region’s nutrition and food security situation. We study the association between the different aspects of food security and cereal production in South Asia that have prevailed over the past 25 years. We find a beneficial role of the production and yield of cereals in lowering the extent of undernourishment. A 1% increase in cereal production and yield is associated with up to 0.84% decrease in the prevalence of undernourishment. The impact is significant over a period of 3 years. The positive effect is particularly evident in the case of rice and maize production. An improvement is seen in the aspects of availability, stability, and utilization of food security but not in the aspect of access. These findings are robust to alternative specifications and techniques. The results explain, in part, the means by which South Asian nations have managed to stall relative increases in extreme hunger and food insecurity.     

Fiscal policy and economic activity in South Asia

This paper analyzes whether fiscal policy in South Asia amplifies or smoothens business cycle fluctuations. It estimates several econometric models to explore the cyclicality of government spending and tax buoyancy. In South Asia, tax revenue increases less than one to one with changes in gross domestic product (GDP), but public spending increases more than proportionally. For each percentage point change in GDP growth, government expenditure changes by 1.3 percentage points. While changes in tax revenue have no significant impact on economic activity, the government spending multiplier is positive and significant: each additional US dollar (USD) of spending leads to an immediate increase in GDP of 0.2 USD and to an increase of 0.4 USD in the medium run. The impact of public spending on economic activity is entirely due to capital expenditure, which is also more procyclical. Procyclical public spending and a positive expenditure multiplier imply that fiscal policy in South Asia amplifies boom‐and‐bust cycles. These results are in line with those of other emerging markets and developing economies and robust to different model specifications and estimation strategies.     

An analysis of East Asian currency area: Bayesian dynamic factor model approach

There has recently been an increasing interest in the establishment of a common currency area in East Asia in the aftermath of the East Asian financial crisis. In this article I examine the desirability and feasibility of forming a currency area in the region by checking the symmetry of shocks as an important criterion of the theory of Optimum Currency Area. I employ a dynamic factor model to decompose aggregate output into world, regional and country‐specific components and estimate the model using a Gibbs sampling simulation. Persistent properties of those components are examined and variance decomposition analysis is performed to investigate the role of each component in output variance. The European Monetary Union, with the successful launch of the euro, is the natural benchmark for comparison. Based on variance analysis, it is found that East Asian countries, on average, are less plausible candidates for a currency area than European counterparts. However, a subgroup of countries in East Asia is as qualified as those in Europe. Given the ongoing integration in East Asia, it is not premature to prepare for such a currency area in this region.     

The Dowry Gift in South Asia: An Institution on the Intersection of Market and Patriarchy

Abstract

Dowry refers to marriage gifts that are instrumental to the negotiation of the marriage contract. Historically, the dowry gift was constituted by law across the Roman empire. While dowry has become largely irrelevant in Europe in contemporary times, it is still pervasive across the Brahmanical Hindu societies of South Asia. Moreover, what was traditionally token gifts from friends and well-wishers has taken on the form of “new dowry” since the colonial period. “New dowry” is heavily composed of cash and market goods, including land and is frequently accompanied by violence against new brides when their families fail to make larger dowry gifts with higher market value. This article examines the evolution of “new dowry” through a Polanyian lens. Unlike the neoclassical Beckerian approach which takes an ahistorical outlook to marriage as a “market” for matching partners and dowry as a market price, the substantivist lens à la Polanyi investigates the historical evolution of “new dowry” through the advent of market processes in the colonial period and the countermovement of legal reform in the post-colonial period.     

Measuring uncertainty of the euro area NAIRU: Monte Carlo and empirical evidence for alternative confidence intervals in a state space framework

This paper investigates uncertainty around point estimates of the euro area NAIRU in a state space framework. The relative accuracy of alternative measures of uncertainty for state space models are compared using Monte Carlo simulations. A direct bootstrap method yields confidence intervals with lower coverage probability than confidence intervals based on mean squared errors (MSE) approximations. The degree of uncertainty of the euro area NAIRU is estimated with a trivariate state space model. The direct bootstrap method shows the narrowest confidence interval compared with the MSE approximations. However, the wider intervals based on MSE approximations are narrow enough for the identification of some periods in time where observed unemployment and the NAIRU differ significantly.     

Determinants of sovereign bond yield spreads in the EMU: An optimal currency area perspective

In the light of the recent financial crisis, we take a panel cointegration approach that allows for structural breaks to the analysis of the determinants of sovereign bond yield spreads in nine economies of the European Monetary Union. We find evidence for a level break in the cointegrating relationship. Moreover, results show that (i) fiscal imbalances – namely expected government debt-to-GDP differentials – are the main long-run drivers of sovereign spreads; (ii) liquidity risks and cumulated inflation differentials have non-negligible weights; but (iii) all conclusions are ultimately connected to whether or not the sample of countries is composed of members of an Optimal Currency Area (OCA). In particular, we establish (i) that results are overall driven by those countries not passing the OCA test; and (ii) that investors closely monitor and severely punish the deterioration of expected debt positions of those economies exhibiting significant gaps in competitiveness.     

Agricultural intensification, irrigation and the environment in South Asia: Issues and policy options

High population pressure and the rapid pace of human activity including urbanization, industrialization and other economic activities have led to a dwindling supply of arable land per capita and a process of agricultural intensification in South Asia. While this process has significantly increased food production to feed the growing population, it has also entailed considerable damage to the physical environment, including degradation and depletion of natural resources and unsustainable use of land and water resources. This paper employs the analytical tools of economic theory, environmental and ecological economics to model the impact of irrigation in South Asia. It underscores the need for an eclectic approach to policy responses stemming from private and common property rights theories, externality theory and sustainability theory with a view to environmentalizing agricultural development.     

Assessing a Perfect European Optimum Currency Area: A Common Cycles Approach

In this paper we introduce a new definition for an optimum currency area (OCA) which is more restrictive than the previous ones. Indeed, using both a cointegration and a common cyclical feature analysis in a VAR(p)framework, a set of countries is said to constitute a perfect OCA if theshort-run dynamics is perfectly correlated while long-run relationships arenot constrained. Using seasonally unadjusted industrial production indicesfor the period 75:M1 to 97:M4, we show that European countries are notsufficiently related to fit our definition.     

Challenges in Measuring Poverty and Understanding its Dynamics: A South Asian Perspective

South Asia’s success at reducing poverty does not imply that the topic has become passé. Poverty rates are by now low, but this is because poverty lines are low as well. And the assessment of living standards and their dynamics are blurred by measurement and interpretation challenges. This paper relies mostly on South Asian examples to highlight four tensions: poorer versus richer households, rural versus urban locations, monetary versus non‐monetary dimensions of wellbeing, and household characteristics versus context. The discussion is conducted against the backdrop of the two analytical approaches with South Asian roots that have shaped the debate for decades. This review leads to three main recommendations: household survey data has to be exploited in a more thorough manner, data that is increasingly available from other sources needs to be incorporated more systematically in the analysis, and the multiple dimensions of wellbeing should be better integrated in a common framework.     

The convergence of inflation rates in the EU-12 area: A distribution dynamics approach

This paper provides an assessment of Euro area inflation dynamics based on the distribution dynamics approach. It is found that raw series and trends have converged, although the convergence process has not been constant over time. Inflation cycles still lack of synchronization over short time horizons. In search for an economic explanation for cyclical inflation dynamics, the paper suggests that country-specific labor market institutions are likely to affect inflation outcomes above all in high inflation countries. Moreover, the cyclical inflation divergence arises from output fluctuations.     

Financial development,political rights,civil liberties and economic growth: Evidence from South Asia

A number of existing studies have examined the theoretical link between financial development and economic growth. Kose et al. (2010), among others, have argued that financial development can affect the extent of the benefits from foreign direct investment. Other studies, such as Huang (2010) have suggested that the quality of political institutions can also affect the level of financial development. This implies that the extent of the benefits from financial development also depend on the quality of governance. However, few empirical studies have considered these issues. By making use of panel data over the period 1970 to 2009, this paper focuses on the impact of the interaction of (i) financial development and foreign direct investment and (ii) financial development and the quality of governance on economic growth in South Asia. Our empirical analysis, suggests that financial development has contributed to an increase in the benefits of FDI in South Asia. In addition, improvement in political rights and civil liberties has also enhanced the benefits of financial development in South Asia.     

东(南)亚地区华人资本在华外商直接投资现状及趋势分析

海外华人资本是世界经济的重要组成部分.近年来,随着经济全球化和中国对外开放的深入发展,海外华人资本,特别是东(南)亚地区华人资本纷纷涌向中国大陆进行投资,构成了中国大陆实际利用外商直接投资的主体,并对中国大陆经济发展起到了巨大的推动作用.东(南)亚华人资本在中国大陆直接投资的阶段及特征,有其独特性.     

Environmental rationalities and the development state in East Asia: Prospects for a sustainability transition

This paper reviews what is known about recent trends in environmental governance among the newly industrializing countries of East Asia and the implications of these developments for a sustainability transition within the region. The conceptual starting point for the review is research that examines sustainability transitions within the framework of a multi-level perspective on system innovation. One of the challenges presented by this framework is that of understanding how existing political economies and governance structures promote stability or change in socio-technical regimes. By socio-technical regimes we mean the predominant organizational, social and technological configurations through which societal needs are constituted and met. In the case of the rapidly industrializing and urbanizing economies of East Asia, the trajectory of socio-technical regimes will have profound consequences for local, regional and global environments. Our review of trends in environmental governance as they relate to socio-technical regimes within the region traces a pattern of initial efforts to strengthen environmental regulatory regimes very much along the lines of the policy models of OECD economies. The degree to which these initial efforts have taken root varies from country to country in the region. What is beginning to emerge in several countries within the region, however, are a variety of policy and institutional innovations that hold promise for opening up spaces for change in socio-technical regimes, and for creating opportunities for new pathways of industrialization and urbanization to take hold that are less pollution, materials and energy-intensive.     

东亚区域经济合作新模式:中国-东盟自由贸易区

2001年11月在第五次东盟与中国领导人（10＋1）会议上，中国与东盟达成一致，确立了10年内建成中国－东盟自由贸易区的目标。这对双方关系的长远发展和东亚地区的繁荣稳定具有深远意义。它是中国继加入世界贸易组织后又一件对外经贸方面的重大事件。本就这一东亚区域合作的新模式产生的国际背景，以及实现目标所面临的困难进行分析。     

东亚货币一体化的再考察:一个多变量的结构VAR方法

本文建立了一个三变量的结构VAR模型,分别从经济冲击的对称性、经济冲击的规模和经济体对潜在经济冲击的调整速度,以及实际有效汇率对各种冲击的响应三个方面,考察了东亚国家和地区组建最适度通货区的经济可行性。实证研究发现,目前东亚经济体并不满足建立一个全面单一的最适度通货区的条件,但是分别在日本和泰国,以及韩国、马来西亚和中国台湾组建子通货区却是可行的。     

Uncertain spatial demand and price flexibility: A state space approach to duopoly

Sufficient conditions for a unique price equilibrium, in terms of the uncertainty distribution and the state contingent consumer distributions, are given for spatial duopoly. Also considered are efficiency and endogenous locations for the symmetric case and comparative statics on price flexibility.     

Energy insecurity in Asia: A multi-dimensional analysis

Energy insecurity has been a critical challenge facing Asia’s economic growth. This study constructs a comprehensive index for energy insecurity as well as examines its trend using a sample of 24 selected Asian countries during the 1990–2014 period. For this purpose, principal component analysis is applied to a series of 12 selected variables. The variables are standardized using different techniques including z-score, min-max and softmax normalization. Three different measures of energy insecurity are created accordingly. The empirical results depict the trend of increasing energy insecurity in Bangladesh, China, India, Indonesia, Malaysia, Nepal, Pakistan, Saudi Arabia, Sri Lanka, Thailand and Vietnam. On the other hand, the trend of fluctuating but recently improving energy security was observed in Hong Kong, Japan, Mongolia, Singapore, South Korea, and United Arab Emirates. Meanwhile, the trend of fluctuating but recently increasing energy insecurity was found in Iran, Iraq, Jordan, Kazakhstan, Lebanon, and Tajikistan. These findings are robust to all three measures of energy insecurity.