Liquidity in Asian markets: Intensity of Regional and global linkages

This study investigates cross-market linkages and the intensity of liquidity spillovers across nine Asian markets and five developed markets during 2006 to 2016. Further, the study examines the contagion caused by recent global financial crisis and its impact on the market liquidity. The direction and intensity of spillovers has been measured using forecast error variance decomposition method as suggested by Diebold and Yilmaz (2012). Among the developed markets, the United States, Germany and the United Kingdom significantly affect liquidity changes in Asian countries like India, China, Singapore and Japan. The results revels that on average, each Asian market receives 7% spillover from the global markets and 16% from regional markets. During the financial crisis, the average regional spillover increased to 20% and the global spillover increased to 11%. Thus, in Asia, the regional spillover is higher than the global spillover. Our results support the demand side hypothesis and suggest that it is the trade and portfolio investments that drive the liquidity spillovers. Our findings have potential implications for international investors, policy makers and market regulators.     

A SEARCH FOR CLOSER ECONOMIC RELATIONS IN EAST ASIA

In recent years, growing interdependence in East Asia through trade and financial cooperation heightened the need for East Asian Economies to engage in closer regional economic relations. This paper attempts to discuss emerging economic integration efforts in East Asia with special reference to bilateral and regional free trade agreements. It discusses backgrounds for recent developments of East Asian regionalism in terms of deepening intraregional economic dependence and financial cooperation, and South Korea's position towards FTAs with major trading partners as well as East Asian economic integration. Important issues and challenges for an East Asian FTA are presented.     

The source of global stock market risk: A viewpoint of economic policy uncertainty

This study explores the effect of economic policy uncertainty (EPU) in four countries or regions (China, Japan, Europe, and the United States) on the contagion risk of investments in the global stock market. The stock returns of 22 stock markets worldwide are analyzed to determine which region’s EPU exhibits the greatest effect on regional systematic risk in the global stock market and on volatility risk in individual stock markets. First, all of the samples, the markets of different continents and the spillover indices of the developed and emerging markets, are calculated to observe the dynamic correlation among these markets with the aim of quantifying regional systematic risk and further examining the contagion risk effect of EPU. The results indicate the following: EPU in China is the most influential, and its contagion risk spreads to different regional markets, except for Europe; the effect of EPU in the United States is inferior to that in China; EPU in Japan merely influences contagion risk in emerging markets; contagion risk in European markets is not influenced by the four EPU indices; and EPU in Europe is not influenced by contagion risk in the global stock market. However, according to the volatility risk in each market, the EPU in Europe and China respectively influence Asian countries and European countries the most. These results may be attributable to the extremely high trade dependence among these countries because the performance of international enterprises is mainly determined by the economic policies of their trading partners.     

美国金融危机对我国进出口贸易冲击的实证研究

中美两国互补型的直接贸易关系紧密,美国金融危机导致美国国内收入水平的下降、美元贬值以及物价水平波动易通过直接贸易溢出对中国进出口贸易状况形成冲击。研究发现,危机通过收入效应对我国贸易状况产生的溢出较弱,而通过价格效应对我国贸易状况产生了明显溢出,并且对我国的出口贸易冲击较大。出口贸易对美国价格水平变化冲击的响应强度、持续时间和衰减方式都发生了显著变化。     

Veblen and Kropotkin on Human Evolution

This paper studies the spillover effects of economic fluctuations in the United States on economic activity in Latin America and the Caribbean. Fluctuations in U.S. GDP growth have spillover effects that stimulate real growth and accelerate price inflation across many countries. Underlying these spillover effects are significant movements in private consumption, and to a larger extent, private investment. Openness to the United States has significant effects that accelerate growth of exports and/or imports across many countries. The net effects on the trade and current account balances vary across countries. Overall, the evidence supports concerns about adverse spillover effects of a slowdown in the U.S. economy on neighboring countries, necessitating careful mobilization of countercyclical domestic tools to hedge against potential risk and mitigate the severity of economic downturns.     

FOREIGN OWNERSHIP, WAGES, AND WAGE CHANGES IN U.S. INDUSTRIES, 1987–92

The authors construct a data set by industry by state by ownership for establishments in the United States using 1987 and 1992 U.S. Census and Bureau of Economic Analysis matched data to investigate the relationship between foreign ownership and wages. They find evidence that foreign-owned establishments pay higher wages in manufacturing, retail trade, and other relatively low-skill industries, but not in other higher-skill industries. A growth in the fraction of employment in foreign establishments was not significantly associated with an increase in overall wages. There is no evidence of a wage spillover to domestic establishments. (JEL J3 , F2 )     

US Trade Policy in the Trump Administration

President Donald Trump has emphasized three recurring themes regarding trade policy: the importance of trade balances, including bilateral trade balances, currency manipulation to gain unfair advantage in trade, and “disastrous” trade agreements. Asia figures prominently in these concerns. Trump withdrew the United States from the Trans‐Pacific Partnership, is increasing contingent or process protection, demanding the renegotiation under duress of the North American Free Trade Agreement and the Korea‐United States Free Trade Agreement. These policies are modeled quantitatively and results generated for sectoral output and employment at the state and metropolitan area level.     

Unity versus Collaboration: Construction of China's Belt and Road Free Trade Agreement 2.0 Network

In the context of the United States prioritizing bilateral as well as trilateral trade agreements and China's regional economic integration strategy based on the Belt and Road (B&R) Initiative, the B&R free trade agreement (FTA) and the US–European–Japanese FTA (UEJFTA) have become the two regional economic integration processes with the greatest potential impact on the world economic landscape. The present paper examines the game situation as well as the economic effects of China's B&R‐FTA 2.0 network against the United States' UEJFTA to study the optimization of China's B&R FTA system. By constructing a four‐country extended game model under a two‐part expansion, we find that an increase in members will promote the welfare of each country when there is a single regional trade agreement; the potential member countries tend to choose larger organizations for higher economic benefits when there are several regional trade agreements. Our quantitative simulation shows that promoting the construction of the FTA 2.0 network based on the B&R can significantly alleviate the impact of FTA entered into by the United States with its major trading partners.     

Exchange Rate Passthrough to Export Prices: Assessing Cross‐Country Evidence*

A growing empirical literature reports evidence of a decline in exchange rate passthrough to import prices in a number of industrial countries. Our paper complements this literature by examining passthrough from the other side of the transaction; that is, we assess the exchange rate sensitivity of export prices (denominated in the exporter's currency). We find that the prices charged on exports to the United States are more responsive to the exchange rate than are export prices to other destinations, which is consistent with results in the literature that import price passthrough in the US market is relatively low. In addition, the exchange rate sensitivity of export prices over time has been significantly affected by country‐ and region‐specific factors, including the Asian financial crisis (for emerging Asia), deepening integration with the United States (for Canada), and the effects of the 1992 ERM crisis (for the United Kingdom).     

The role of the United States in the global economy and its evolution over time

This article aims at assessing the role of the United States in the global economy and its evolution over time. Based on a Global VAR modeling approach, this article shows first that countries with a large trade exposure with the U.S. economy have a relatively larger sensitivity to U.S. developments. However, even for countries that do not trade so much with the U.S., they are largely influenced by its dominance through other partners’ trade. Moreover, while no clear trend seems to emerge, it seems that the role of the U.S. in the global economy has changed over time. Overall, for most countries—the latest recession excluded—a change in U.S. GDP had weaker impacts—though more persistent—for most recent periods. The latest recession, however, led to some renewed increase in the sensitivity of the economies to U.S. developments.     

Regional Currencies Versus Dollarization: Options for Asia and the Americas

This paper undertakes an empirical assessment of Dollarization versus regional currency union as options for the economies of East Asia, South America and Central America. We use summary indicators of bilateral integration to examine the determinants of real exchange rate volatility within each region and between each region and the United States. While Europe is characterized by a high degree of regional integration, there is evidence of increasing integration in East Asia and persistently low integration in the Americas, especially as compared to the levels of bilateral integration vis-à-vis the United States. Our estimates confirm the patterns of regional integration above and reveal substantial regional differences as to the determinants of real exchange rate volatility.     

知识溢出下增长收敛的复杂性

在知识经济条件下,贸易自由化能否对一个国家的产出水平产生影响,能否为国际经济带来收敛,这是一个重要问题。文章通过假设国家之间构成一个知识网络,贸易中存在非线性的知识溢出,模拟了单边或多边关税下调对一个国际经济增长的收敛行为。研究结果表明,进入WTO体系后关税下调并不总意味着收敛的出现,收敛性依各经济体的初始状态和学习能力的大小而出现复杂行为,在知识网络体系单元取向上,网络的溢出参数——学习能力是决定性因素。多区域系统一旦出现收敛,则不会以牺牲富国利益为代价,即收敛是以低水平稳态向高水平稳态转移的形式出现的。     

Regime changes and the impact of currency depreciations: the case of Spanish–US industry trade

Over the past half century, Western Europe has been part of varying currency regimes. Yet, whether under Bretton Woods, the European Monetary System, or the Euro, exchange-rate fluctuations have had an influence on these countries’ trade flows with the United States at the national and the industry level. This study looks at the case of Spain, examining the role of real exchange-rate fluctuations on trade with the United States for 74 industries. We find that the trade balances of only 40 industries are cointegrated with their macroeconomic determinants, but that 26 of these respond positively in the long run to a real depreciation. While industry characteristics do not seem to explain which industries are more likely to do this, we find that a relatively large share of industries in the Machinery sector see their trade balances improve after a depreciation.     

Adam Smith on colonies: An analytical and historical interpretation

It is our conclusion that Adam Smith advocated and justified policies of anticolonialism and antiprotectionism. Smith was opposed to the theory and policy of mercantilism, which involved an emphasis on the imperialistic exploitation of colonies as a method of accumulating the precious metals within the boundaries of mercantilistic nations. Smith led British public opinion into a period when little-Englandism replaced colonialism and free trade replaced protection. This period continued as long as the Industrial Revolution enabled England to dominate world trade. After 1875, however, the industrialization of the United States, Germany and Japan intensified the competitiveness of international trade and threatened to destroy British domination of world markets. These developments caused a resurgence of the new imperialism and motivated the British government to participate in the partition of Africa and to impose British hegomony over Asia. This new imperialism ran its bloody course of military aggression before it self-destructed at the end of the Second World War.     

Social responsibility,entrepreneurship, and the goals of firms: An examination of current economic literature

It is our conclusion that Adam Smith advocated and justified policies of anticolonialism and antiprotectionism. Smith was opposed to the theory and policy of mercantilism, which involved an emphasis on the imperialistic exploitation of colonies as a method of accumulating the precious metals within the boundaries of mercantilistic nations. Smith led British public opinion into a period when little-Englandism replaced colonialism and free trade replaced protection. This period continued as long as the Industrial Revolution enabled England to dominate world trade. After 1875, however, the industrialization of the United States, Germany and Japan intensified the competitiveness of international trade and threatened to destroy British domination of world markets. These developments caused a resurgence of the new imperialism and motivated the British government to participate in the partition of Africa and to impose British hegomony over Asia. This new imperialism ran its bloody course of military aggression before it self-destructed at the end of the Second World War.     

The spillover effect of the US uncertainty on emerging economies: a panel VAR approach

The article quantifies the spillover effects of the United States’ (US) uncertainty shocks on emerging economies, using a panel VAR model. We find that the US uncertainty shocks are the risks, and hence drop the capital inflow, investment, consumption, export and output of emerging economies. This also induces a depreciation of emerging market currencies. As a result, our model predicts a fall in short-term interest rate of emerging economies to react against the US uncertainty shocks. Our findings partly help explain the slow recovery of the world economy after the 2008–2009 global financial crisis.     

Who produces for whom in the world economy?

Abstract For two decades, the share of trade in inputs, also called vertical trade, has been dramatically increasing. In reallocating trade flows to their original input‐producing industries and countries, this paper suggests a new measure of international trade: ‘value‐added trade’ and makes it possible to answer the question ‘who produces for whom?’ In 2004, 27% of international trade was vertical trade. The industrial and geographic patterns of value‐added trade are very different from those of standard trade. Value‐added trade is relatively less important in regional trade but the difference is not more important for Asia than for America.     

Economic Integration Among Taiwan, Hong Kong and China: A Computable General Equilibrium Analysis

This paper investigates the effects of economic integration among Taiwan, Hong Kong and China (CEA). A seven-region, seven-sector computable general equilibrium model for world production and trade is developed for this purpose. The simulation results demonstrate that the three Chinese economies would benefit greatly from further integration by means of liberalizing trade policies. The opportunity cost of isolating the United States from East Asia is high for both the US and the three Chinese economies, suggesting that an economically integrated CEA is in the long-term strategic interest of the United States.     

The spillover effects of United States foreign trade zones

This article empirically tests the geographic and economic spillover effects of foreign trade zones (FTZs) in the United States by utilizing propensity score matching and the geographic rules of the programme. While these FTZ sites are designed to support manufacturing, we find that ZIP codes that receive FTZ sites experience growth in new and existing non-manufacturing establishments. Our results also show that FTZs spillover into nearby ZIP codes. We find that ZIP codes that border FTZ ZIP codes also experience positive effects on non-manufacturing establishments and these spillovers are strongest within a 5-mile radius of an FTZ.     

Trade-induced sectoral upgrading and upstream financial flows

This paper shows that deepening trade integration may have non-monotonic impacts on the direction of financial flows in a world with heterogeneous financial development. By inducing the more financially developed country (North) to specialize towards the financially constrained, high-return sectors, trade integration reduces the return to capital in the unconstrained, low-return sectors, which reverses the upstream financial flows, as predicted by Antras and Caballero (2009, Journal of Political Economy). However, if the cross-country difference in financial development and the investment elasticity in North are sufficiently large, North may offshore the low-return sectors and specialize fully in the high-return sectors. In this case, upstream financial flows may not be dampened or reversed in the long run. My findings offer an alternative perspective of understanding the persistent current account imbalances between emerging Asia and the United States.