Did the Recent Housing Boom Signal the Global Financial Crisis?

2005 prediction of the current global crisis followed from two key observations: (i) the recent housing booms in the United States and other advanced countries were not explained by economic fundamentals; and (ii) historically similar financial booms eventually collapsed, leading to recession. This article provides an empirical framework linking 2005 observations and crisis prediction. We utilize vector error correction models and panel probit and logit models to show that tracking a single variable, real house prices, was sufficient to predict the current global crisis.     

How Did the Dollar Peg Fail in Asia?

In this paper, we have constructed a theoretical model in which the Asian firm maximizes its profit, competing with the Japanese and the U.S. firms in their markets. The duopoly model is used to determine export prices and volumes in response to the exchange rate fluctuations vis-à-vis the Japanese yen and the U.S. dollar. Then, the optimal basket weight that would minimize the fluctuation of the growth rate of trade balance was derived. These are the novel features of our model. The export price equation and export volume equation are estimated for several Asian countries for the sample period from 1981 to 1996. Results are generally reasonable. The optimal currency weights for the yen and the U.S. dollar are derived and compared with actual weights that had been adopted before the currency crisis of 1997. For all countries in the sample, it is shown that the optimal weight of the yen is significantly higher than the actual weight.J. Japan. Int. Econ.,Dec. 1998,12(4), pp. 256–304. Institute of Economic Research, Hitotsubashi University, Kunitachi, Tokyo 186, Japan; Department of Commerce, Hitotsubashi University, Kunitachi, Tokyo 186, Japan; Department of Commerce, Takachiho University, Suginami, Tokyo 168, Japan.Copyright 1998 Academic Press.Journal of Economic LiteratureClassification Numbers F31, F33, O11.     

Did APEC's Trade Facilitation Action Plans deliver the goods?

This paper uses new data to examine whether APEC achieved its aim of reducing trade transaction costs by 10% over the 2002–2010 period. An inversion of the familiar gravity model makes it possible to infer trade costs based on the observed pattern of trade and production across economies. Analysis of trade costs calculated in this way shows that although intra- and extra-APEC trade costs fell during the sample period, they did not do so substantially more quickly than elsewhere in the world. Indeed, the region taken as a whole did not meet the 10% reduction goal. However, a considerable number of individual economies not only met the goal, they greatly exceeded it. Consistent with their outward oriented development strategies and leverage of global and regional value chains, some APEC economies saw very rapid falls in their trade costs over the 2002–2010 period, Viet Nam being a standout performer. Overall, about one third of the forum's membership for which consistent data are available met or exceeded the 10% reduction goal. APEC's two Trade Facilitation Action Plans can therefore be seen as having had mixed records of success.     

Did International Outsourcing Cause the Increase in China's Skill Premium?

This study analyzes the transmission mechanism for the increase in the skill premium caused by international outsourcing through skill‐biased technological change (SBTC). Using 2000–2013 panel data from 27 manufacturing industries in China, this study conducts both probit and Tobit tests and shows that international outsourcing led to SBTC in China's manufacturing industries. A positive correlation is found between international outsourcing and the increase in the skill premium in both static and dynamic models. For each 1‐percent increase in the international outsourcing index, the skill premium will rise approximately 10 percent. This finding indicates the existence of a mechanism through which the effect of international outsourcing on the skill premium is reinforced where SBTC is occurring. However, this may enlarge wage gaps within the same industry. Therefore, China should not only use the skill premium to promote the transformation and upgrading of industries benefiting from outsourcing and optimize the structure of employment but also prevent the negative effects of an increased skill premium.     

Did the communists contribute to China’s rural growth?

The communist revolution brought unprecedented changes to China. Yet there is no consensus on its role in the history of China’s modern economic growth. We investigate whether local communist party membership affected developmental outcomes from 1957–78 (the Maoist period) and 1978–85 (the reform period). Focusing on Sichuan, China’s most populous province, we use the Long March as an instrument to tease out causal effects. We find that counties with more communist members made larger strides in educational attainment, road construction, and agricultural mechanization during the Maoist period. However, these counties recorded faster output growth only after 1978. Our findings provide empirical support to field studies conducted by sociologists and historians who argue that the communists improved the organizational infrastructure in China’s countryside. Furthermore, we highlight the futility of solving collective action problems without heeding private incentives.     

Indonesia’s Year of Democratic Setbacks: Towards a New Phase of Deepening Illiberalism?

This article suggests that 2017 has been a year of distinctive democratic setbacks in Indonesia. It offers a tentative framework that explains how democratic regression is likely to continue by virtue of the further mainstreaming of conservative Islamic morality and reactionary hyper-nationalism in Indonesian political discourse and practice. It contends that such mainstreaming has been a growing feature of intraoligarchic competition in Indonesia, the effect of which is to accentuate longstanding illiberal features within Indonesian democracy. While the article focuses on the conflicts surrounding the highly polarising and emotive Jakarta gubernatorial election of 2017 in order to expand on this framework, other controversies are also discussed, including those regarding corruption eradication and continuing impediments to a national ‘reconciliation’ with former Indonesian communists. Developments in Indonesia are set against a global background characterised by growing threats to liberal democracy and the emergence of anti-pluralist political impulses in a range of societies.     

Did Better Firms Enter the Indonesian Manufacturing Sector after the 1997–98 Crisis?

Motivated by a concern that Indonesia is on the path to deindustrialisation, this article uses data from 1991 to 2009 to examine whether there were differences in the characteristics of entrants to the Indonesian manufacturing sector before and after the 1997–98 Asian financial crisis. It finds that entrants after the crisis were larger or less dependent on credit than their predecessors, suggesting that they were more resilient to economic shocks. Yet entrants after the crisis exported relatively less than their predecessors. Meanwhile, productivity levels were the same before and after the crisis, indicating that entrants were able to match the productivity level of incumbents. Contrary to the concerns about deindustrialisation, these characteristics may simply reflect a dynamic that resulted in better or more resilient firms entering the industry after the crisis.     

Did the Unconventional Monetary Policy of the U.S. Hurt Emerging Markets?

Open Economies Review - Policymakers in emerging markets complained that the unconventional US monetary policy response to the Great Recession hurt their economies. US policymakers responded that...     

Did the RIAA’s Prosecution of Music Piracy Impact Music Sales?

Between 2004 and 2009 it is estimated that over 30 billion songs were downloaded illegally on different peer-to-peer sharing networks according to the Recording Industry Association of America (RIAA). In an attempt to stop this during the late 1990’s and early 2000s the RIAA and other music labels engaged in a very public and vigorous campaign of prosecution of firms, such as Napster and Limewire, for copyright violations in order to reduce piracy. Due to the public backlash, in late 2008 the RIAA announced that they would begin to stop litigation on a grand scale. This paper examines the impact that this model of piracy prosecution had on music sales. We find evidence that the RIAA’s model of litigation actually backfired and led to decreased legitimate album sales. Additionally, we find that variation in per capita seasonally adjusted album sales cannot be explained by the existence of both Limewire and Napster file sharing services.     

Discussion on the Benefits Distributing Structure in Village Land Deal

According to everyone average welfare value of land resources; this paper constitutes the base line of glebe usufruct deal value by analyzing the factors, which are affecting glebe usufruct deal value. Having adopted share＇s quotient of ownership and contracting power, the paper erects assigning mechanism to the income of glebe deal. Because of the share dynarnicity being adopted which shows the flexible strong points, the shares of ownership and contracting power avoid many unnecessary otiose disputes on income of glebe deal, adding the stability to the glebe usufruct deal. It is beneficial to the freedom flow and validity manufacture factor installment and also to the nonagricultural changing course.     

Did nordic countries recognize the gathering storm of World War II? Evidence from the bond markets

This paper analyzes and compares different ways of assessing how people perceived impending threats of war in the past. Conventional Nordic historiography of World War II claims there were few, if any, people in the Nordic countries who perceived a significantly increased threat of war between 1938 and early 1940. At the same time, historical methods face problems when it comes to capturing the often tacitly held beliefs of a large number of people in the past. In this paper, we analyze these assessments by looking at sudden shifts in sovereign debt yields and spreads in the Nordic bond markets at that time. Our results suggest that Nordic contemporaries indeed perceived significant war risk increases around the time of major war-related geopolitical events. While these findings question some—but not all—of standard Nordic World War II historiography, they also demonstrate the value of analyzing historical market prices to reassess the often tacitly held views and opinions of large groups of people in the past.     

Shall the New EU Members Introduce the Euro? Some Macroeconomic Policy Effects

After the EU enlargement in 2004, there is a clear commitment of the EU and the new member states to aim at an enlargement of the euro zone within the European Economic and Monetary Union (EMU) as well. This might have significant effects on the old EMU, the new members, and even on the global economy. The present paper analyzes some macroeconomic effects and particularly the impact on the effects of stabilization policies when switching to an enlarged euro zone under different assumptions about fiscal and monetary policy regimes in Europe and under alternative types of economic shocks. Also, the implications for the US of different European monetary regimes are evaluated. The results suggest that economic benefits for all countries are rather small. For the Central and Eastern European countries (CEECs), even disadvantages may dominate.     

Highway to Economic Growth? Competition in Public Works Tenders in the Democratic Republic of Congo

The Democratic Republic of Congo (DRC) is one of the poorest countries in the world. The construction sector will play an essential part to bring the country on the path of economic growth, and competition within the sector is crucial to achieve this goal. In this paper, we analyse the effect of competition in public works tenders in the DRC, using a unique and newly assembled database on public works contracts. We find that the number of participating bidders significantly reduces contract prices, confirming our prior hypothesis that competitive pressure can enhance the overall performance of the sector. Further, we account for the possibility of heteregenous tender participants, finding that the competition effect can vary with the degree of bidders' heterogeneity.     

Did the 48‐hour week damage Britain's industrial competitiveness?1

Britain's 1919 introduction of a 48‐hour week for industrial workers has been highlighted as a key factor depressing its relative labour productivity. This largely ignores both any potential offset to lower hours from higher hourly productivity and the fact that the 48‐hour week was also introduced in almost all other industrialized nations (generally involving substantially greater reductions in hours). We examine the international context and the short‐term impact on British productivity, focusing on three major export industries—coal, cotton, and iron and steel. Britain did not suffer any significant relative productivity loss in these industries, while reduced working hours are shown to have been partially compensated for by higher hourly productivity.     

Did the Great Recession Affect Fertility? Examining the Impact of Job Displacements on the Timing of Births in the United States

We examine the impact of job losses during the Great Recession on fertility in the United States. We find that for married/cohabiting couples, job losses of males during the recession decreased the likelihood of birth. In contrast, job losses of married/cohabiting females had no impact, on average, on fertility because of opposing age-specific effects. Although younger women were reducing fertility after job losses to cope with the loss of income, older women, aged 40 and above, were more likely to have a child following their job loss. Moreover, we find that job losses of single/noncohabiting females decreased the likelihood of birth, particularly for women below the age of 25. This negative effect on fertility persisted in the medium-term, up to three years following the job losses. Overall, these results suggest that job losses during the recession may be partly responsible for the recent decline in the U.S. birth rates.     

Did the Glorious Revolution contribute to the transport revolution? Evidence from investment in roads and rivers 1

The Glorious Revolution has been linked with Britain's economic development in the eighteenth century. This article argues that it contributed to the early transport revolution. First, it shows that the regulatory environment became more favourable for undertakers, with their rights being better protected. Second, it shows that investment in improving roads and rivers increased substantially in the mid‐1690s shortly after the Glorious Revolution. Regression analysis and structural breaks tests confirm that there was a change in investment even after controlling for other determinants of investment. The results have implications for debates on the role of political change in British economic growth.     

Did Leaving the Gold Standard Tame the Business Cycle? Evidence from NBER Reference Dates and Real GNP

Cover and Pecorino (2005) claim that the March 1933 departure from the gold standard is the most probable break point ushering in an era of longer U.S. expansions, both absolutely and relative to subsequent recessions. Their analysis is based on cycle durations as defined by National Bureau of Economic Research (NBER) reference dates. However, much of macroeconomic analysis is based on (i) growth cycles (i.e., periods when the economy's production is above or below trend) rather than absolute increases or decreases in economic activity; and (ii) aggregate time series' volatility as the prime indicator of macroeconomic stability. In light of this, we reevaluate the March 1933 break point. First, using HP‐filtered quarterly gross national product (GNP), our analysis of growth cycle durations still implies a break point near 1933. Second, we test for structural breaks in the volatility of GNP growth rates and deviations from trends. These tests suggest a structural break considerably later than 1933, perhaps as late as the 1950s.