How is the Asian economy recovering from COVID-19? Evidence from the emissions of air pollutants

This study examines how economic and social activities in Asia were affected by the COVID-19 pandemic, using the emissions of various air pollutants as representative measures of those activities. Our review of emissions data suggests that the amount of air pollutants emitted decreased in most subnational regions from 2019 to 2020. We also determined that economic and social activities have restarted in some regions in many countries. Moreover, we conduct regression analyses to identify the types of regions that restarted earlier. Regional characteristics are distinguished by employing a remotely sensed land cover dataset and OpenStreetMap. Results reveal that in the case of the Association of Southeast Asian Nations (ASEAN) forerunners, economic and social activities in cropland, industrial estates, accommodations, restaurants, education, and public services have not yet returned to previous levels.     

Should the Law of One Price be Pushed Away? Evidence from International Commodity Markets

The long-term validity of the law-of-one-price hypothesis is explored empirically in international markets for individual commodities. The data consist of 10 commodity groups: lead, maize, newsprint, rice, rubber, sugar, tin, wheat, wool, and zinc. The results provide broad support for the hypothesis: out of the 17 bivariate relationships investigated, the hypothesis is supported in 14 cases. The results also imply that two thirds of the deviations from the law are eliminated within one year, on average. Thus, at the commodity level, the adjustment speeds are found to be considerably faster than what has been found previously for aggregate price indices.     

Has the Internet Eliminated Regional Price Differences? Evidence from the Used Car Market

We study the effects of the Internet on regional price differences. Comparing two Dutch regions, we find that before the rise of the Internet, price differences of used cars between those regions amounted to some 11–15%, controlling for mileage, age, fuel type and engine volume. These price differences have completely disappeared after the rise of the Internet, in particular a website that allows consumers to make detailed comparisons between almost all used cars for sale in the Netherlands.     

Do the self-employed underreport their income? Evidence from Japanese panel data

This paper examines to what extent self-employed households underreport their income to tax authorities in Japan. To this end, we employ the so-called expenditure-based approach, which essentially compares the current expenditure of self-employed and wage earner households while controlling for their income, net worth, and household characteristics. Using Japanese household-level panel data for the period 2009−2019, we find that the self-employed possibly underreport their income by 33.0–36.4%. Our findings are also robust to the different preferences (degree of risk-loving, time discount rates, etc.), planned retirement age, and degree of measurement error in expenditure between the self-employed and wage earners.     

How does trade affect the labor market? Evidence from Japanese manufacturing

This paper investigates how increased trade has affected labor demand at different levels of skills in Japanese manufacturing since the 1980s. First, the estimated loss of employment in aggregate manufacturing attributable to increased imports between 1980 and 1990 is 4.7 percent of the 1980 level of employment. Second, the rate of change in the relative wage of non-production to production workers attributable to the change in trade between 1980 and 1990 is 2.4 percent or less. These findings suggest that the effect of increased trade on the Japanese manufacturing labor market in the 1980s is not yet very large.     

Is the Calorie–Income Elasticity Sensitive to Price Changes? Evidence from Indonesia

The calorie–income demand elasticity is an important parameter in the development literature and in the policy arena. Yet, there is very little evidence on the extent to which it can be considered as an unchanging parameter or a time-shifting parameter that, for example, changes with the economic conditions faced by households. In this paper I use data from the 1996 and 1999 SUSENAS surveys in Indonesia to examine whether the relationship between income changes and caloric availability has changed and if so, how. Using the same questionnaire, the SUSENAS surveys collect detailed information on more than 200 different food items consumed over the last seven days by 60,000 households at the same point in time in each survey year. I use nonparametric as well as regression methods to examine two important relationships: (a) the relationship between income and total calories; and (2) the relationship between income and calories from cereals and other foods (excluding cereals and root crops). The empirical analysis finds that the income elasticity of the demand for total calories is slightly higher in February 1999 (the crisis year with dramatically different relative prices) compared to its level in February 1996. In addition, the calorie–income elasticity for cereals as a group increases while the calorie–income elasticity for other food items decreases. The latter finding is interpreted as behavior that is consistent with the presence of a binding subsistence constraint.     

The stability of German export demand equations – have German exports suffered from the strength of the euro?

Since its introduction in 1999, the euro has shown pronounced swings against the US dollar and the British pound. In this study, we investigate whether this evolution has affected bilateral German exports to two of its major export destinations: the US and the UK. Applying the autoregressive distributed lags bounds testing approach, we find different elasticities of trade between the two export destinations. Our results show that the export demand equation for the US seems to be more stable than that for the UK. Furthermore, it seems that the short-run dynamics in particular have changed.     

Do firms' political connections depress the union wage effect? Evidence from China

Our paper reconciles the debated literature on the role of the Chinese unions by exploring the heterogeneous effects of unionization on wages in firms with and without political connections. We utilize a survey of 1268 firms in 12 cities to verify our hypothesis that wages increase due to unionization, but this union wage effect is significantly depressed by firms' political connections. Through a detailed analysis of the mechanism behind the empirical results, we conclude that unions increase workers' wages by strengthening the bargaining power of workers, while this bargaining power can be weakened by firms' political connections. Our main conclusion is robust to a series of robustness checks. Moreover, the results from quantile regressions inform us that the union wage effect and the role of political connections may vary along with the firms' wage distribution. Our findings suggest that the solution to further increase wages for low-wage workers and reduce wage inequality is to make the labor union an independent organization which can freely bargain with firms in terms of workers' wages and benefits, rather than an agency subordinate to the government whose role can be affected by the government support and undermined largely by firms' political connections.     

Do Free Trade Agreements Increase the New Goods Margin? Evidence from Korea

We analyze the changes in the composition of bilateral trade—and more specifically, in the new goods margin—following the free trade agreements (FTAs) signed by Korea between 2004 and 2008. We find that new goods trade increased disproportionately after the FTAs came into effect, and that least-traded goods (LTG)—those accounting for the lowest 10% of trade prior to the FTAs—ended up accounting for 37% of post-FTA trade with FTA partners. In contrast, the corresponding share for a comparable group of countries that did not sign FTAs with Korea was only half as large, averaging close to 20%. We also find that only less than 2% of all least-traded products accounted for most of the growth in LTG trade, and that those goods tended to be clustered in the same industries as the intensively-traded goods. Furthermore, a larger fraction of LTG became heavily traded for the case of FTA partners than for non-FTA countries. Finally, we find evidence that least-traded imports were subject to higher pre-FTA tariff protection than other products.     

Do Currency Barriers Solve the Border Effect Puzzle? Evidence from the CFA Franc Zone

In this paper, we use a gravity model to investigate the extent to which currency barriers explain the border effect puzzle, i.e. the impact of national borders on international trade. We focus on the two monetary unions of the CFA Franc Zone in West and Central Africa. We find that these countries display large border effects, and that currency barriers explain between 17 per cent and 28 per cent of the overall border effect. JEL no. F11, F15, F33     

Do Community Characteristics Influence Environmental Outcomes? Evidence from the Toxics Release Inventory

This research uses neighborhood characteristics (at the zip code level) in 1990 to explain toxic releases in 1993. It combines the Toxics Release Inventory data with demographic data from the 1990 U.S. Census. We first analyze the location of manufacturing facilities in a particular neighborhood using a sample selection model, and then estimate the relationship between releases in 1993 and the demographic characteristics of the neighborhood in 1990. We conduct the analysis for the entire U.S. as well as for different geographic regions to study regional differences in determinants of environmental outcomes. Releases in nonurban areas of the southeastern U.S. exhibit a pattern suggesting that race might be an important determinant of release patterns. Economic characteristics of neighborhoods (such as income levels and unemployment) also affect releases. Our variables that proxy the propensity for communities to engage in political action exert greater influence on environmental outcomes in nonurban areas.     

Do Parents Invest Less in Worse-Performing Children? Evidence from the Asian Financial Crisis

This article uses data from Indonesia around the time of the 1997–98 Asian financial crisis to examine the role of parental preferences in human capital accumulation. Using a household fixed-effects estimation, I test whether parental education spending is affected by child mathematics test scores. I find that parents are more sensitive to the human capital of younger children, who are penalised for having lower skills than their older siblings. Differences in investment by child gender or birth order are evident in 2000 but not in 1997. This suggests that parents may have an efficiency investment strategy only when resource-constrained, and that education of younger children may be a luxury good.     

How do Households Cope with Aggregate Shocks? Evidence from the Mexican Peso Crisis

Household surveys are used to examine the micro-impact of a large aggregate shock: the 1995 Mexican peso crisis. This paper examines how the impact of the crisis differed across households, and the adjustment mechanisms used by households to cope with this shock. The coping strategies examined include changes in household structure, fertility, household labor supply, child schooling, and interhousehold transfers. Many of the mechanisms households use to adapt to idiosyncratic shocks are found not to work with an aggregate shock.     

Do Firms Use Tax Reserves to Meet Analysts’ Forecasts? Evidence from the Pre‐ and Post‐FIN 48 Periods

We examine whether firms decrease tax reserves to meet analysts’ quarterly earnings forecasts in the period prior to FIN 48, and whether that behavior changed following FIN 48. We use analysts’ forecasts of pretax and after‐tax income to impute premanaged earnings, or earnings before any tax manipulation. Pre‐FIN 48, we observe that firms reduce their tax reserves (i.e., increase income) when premanaged earnings are below analysts’ forecasts. Specifically, 78 percent of firm‐quarters that would have missed the analyst forecast if not for the tax reserve decrease, meet that target when the decrease is included. Furthermore, we find a significant positive association between the decrease in tax reserves and the deviation of premanaged earnings from analysts’ forecasts. In contrast, post‐FIN 48, we find no evidence that firms use changes in tax reserves to manage earnings to meet analysts’ forecasts. Thus, our results suggest that FIN 48 has, at least initially, curtailed firms’ use of tax reserves to manage earnings.