WAGE–PRICE DYNAMICS AND DEFLATION IN HONG KONG

Abstract. We provide empirical evidence on the dynamics of prices and wages in Hong Kong. The results suggest that the post‐1997 deflation can be understood using a conventional macroeconomic framework wherein foreign influences constitute the basic underlying shocks, and adjustment processes in domestic wages and prices determine the details of the transmission mechanism. We find that the decline in local nominal prices owes much to declining prices of imported intermediate goods. The negative output gap and increase in unemployment during the deflation period also have their origin in foreign shocks, but the domestic wage adjustment process is an important contributing factor.     

MACROECONOMIC VOLATILITY AND INTERNATIONAL INTEGRATION

This paper explores the effects that varying degrees of international openness have on macroeconomic volatility. The analysis is conducted for a two‐symmetric‐country world under three levels of international integration: that of a closed economy, a financial autarky, and full financial integration. Different degrees of trade openness are considered in the form of home biases, while the economy is left vulnerable to total factor productivity and innovation shocks. Full financial integration is found to reduce firm‐size volatility and volatility in the mass of operative firms following a productivity shock and to increase them after an innovation shock. Moreover, the interaction between international sharing of profits and terms of trade transmissions determines the non‐linear behaviour of consumption‐to‐output ratio volatility found in empirical studies.     

FINANCIAL DEVELOPMENT AND MACROECONOMIC VOLATILITY

Using cross‐country panel data over the period 1996–2012, this paper examines the impact of financial development on macroeconomic volatility using GMM estimators. In contrast to the linear relationship identified in many previous studies, we present robust evidence suggesting that the effect of financial development on macroeconomic volatility is nonlinear and U‐shaped. We also investigate the potential differences between developed and developing countries. The results of the paper add new evidence and shed interesting insights into the recent debate on the role of finance in macroeconomic fluctuations.     

VEHICULAR EMISSIONS AND CONTROL POLICIES IN HONG KONG

This paper briefly analyzes the state of vehicular pollution and control measures in Hong Kong. Vehicular emissions contribute largely to Hong Kong's air pollution and will become more important as the vehicle fleet expands. Hong Kong is unique in that a large fraction of its vehicles use diesel engines. The analysis here explicitly accounts for the composition of emissions and quantifies the relative magnitude of emissions by each of the five main sources: private cars, taxis, light buses, heavy buses, and lorries. The paper analyzes alternative pollution control policies with respect to effectiveness and efficiency.     

DEFLATION IN HONG KONG SAR

Abstract. This paper examines the causes of deflation in Hong Kong, exploring whether deflation reflects a prolonged process of cyclical adjustment or results from price equalization pressures arising from structural integration with Mainland China. To gauge the relative importance of these factors, the econometric analysis presented in this paper focuses on the price dynamics with Shenzhen, a neighboring city in Mainland China. It finds that the source of deflation is mostly cyclical, with the structural factor of price equalization playing a minor role. A qualitative analysis of the channels of price equalization and deflationary persistence corroborates these findings.     

房价上涨与生育率的长期下降:基于香港的实证研究

本文将房价指数纳入新家庭经济学标准生育率方程中,运用Johansen检验与ECM模型对香港1971—2005年生育率、房价指数、女性劳动参与率、女性与男性实际工资年度序列展开协整分析,研究房价上涨对生育率的长期影响。研究结果表明:(1)生育率在长期中服从单位根过程,社会经济因素对家庭生育行为产生累积效应;(2)房价指数平均上涨1%,总和生育率将显著下降0.45%,该结论在一系列敏感性分析中保持稳健。我们的研究从实证上为新家庭经济学提供了来自新兴工业化地区的证据,这些证据与结论对中国在经济增长、城市化过程中人口政策的长期调整和住房价格的调控具有重要的参考意义。     

LABOR MARKET INSTITUTIONS AND MACROECONOMIC VOLATILITY IN A PANEL OF OECD COUNTRIES

In this paper we analyze empirically how labor market institutions influence business cycle volatility in a sample of 20 OECD countries. Our results suggest that countries characterized by high union density tend to experience more volatile movements in output, whereas the degree of coordination of the wage bargaining system and the strictness of employment protection legislation appear to be only of limited importance. We also find some evidence suggesting that highly coordinated wage bargaining systems have a dampening impact on inflation volatility.     

COSTS AND BENEFITS OF AIR QUALITY IMPROVEMENT IN HONG KONG

A respiratory health survey conducted in Hong Kong in 1989 identified significant health differences between school age children living in an industrial area with poor ambient air quality and those in a control group living in a relatively clean area. In 1990, the government banned the use of high sulphur fuel. As a result, ambient sulfur levels dropped sharply and particulate levels dropped moderately. The avoided costs of doctor consultations alone offset a moderate fraction of the costs of this air quality improvement. If even the lower end of estimates from elsewhere apply to Hong Kong's willingness to pay for symptom relief, such values offset a major share of the costs of the air quality improvement simply through near-term improvements in health. Considering longer-term health and other benefits leads one to conclude that the economic benefits likely far outweigh the costs.     

中国宏观经济波动的结构性转变与启示

本文研究改革开放以来30年间中国主要宏观经济指标的季度时序波动性特征。笔者将时变参数随机波动模型应用于离散型时序分析,并运用存在干扰系数情况下的内生断点检验方法来正确识别不同经济指标波动性特征发生结构性变化的准确时间。研究结果表明,经济增长、通货膨胀、货币供给以及有效汇率等主要宏观经济指标的波动特征在20世纪90年代中期均发生显著结构性转变,宏观政策的系统性改进是这些变化的主要动因。     

A NEW COMPARATIVE STUDY ON THE FREE‐FLOATING AND CURRENCY BOARD REGIMES IN HONG KONG

This study aims to compare the performance of free‐floating and currency board regimes for Hong Kong by examining historical data of the two on the output growth and inflation rate. Structural vector autoregression has been applied in the empirical analysis. Without making a strong assumption of unit variance in the residual matrix, this study applies a more natural approach proposed by Cecchetti and Rich to recover the structural parameters. The study has further investigated the recovery of the economy under a demand shock under different exchange rate regimes, in order to provide some evidence to answer why Hong Kong's recovery process after the Asian financial crisis is relatively longer than that in other economies with a managed floating exchange rate regime. New evidence in this study indicates that output recovers much faster in a flexible exchange rate regime than in a fixed exchange rate regime after an aggregate demand shock. Furthermore, this study has applied a more robust method in the counterfactual analysis when comparing the two regimes. New evidence in this study suggests that a free‐floating regime may generate much smaller output variance in Hong Kong and deliver higher output and price levels to Hong Kong.     

THE RELATIONSHIP BETWEEN CONSUMPTION, INCOME AND WEALTH IN HONG KONG

Abstract. This paper estimates a consumption function for Hong Kong along the lines of the standard life‐cycle model. I find a stable relationship between consumption, labour income and wealth with plausible long‐run estimates of the implied marginal propensity to consume out of income and wealth. The marginal propensity to consume out of housing wealth is estimated to be lower than in other industrialized economies, which is consistent with a relatively uneven distribution of wealth in Hong Kong. Arithmetically, the decline in housing wealth in Hong Kong since 1997 can more than account for the weakness of consumption since then.     

香港工业化与工业地理

香港工业是"转移型"工业．因为特殊的历史和市场条件而在战后迅速发展。它的工业主体是出口导向的劳动密集型轻工业。香港自由贸易政策以及优良的港口及服务设施．使这类工业在国际市场上有重要的时效性及低成本的竞争力。1980年初以来,内地开放,使这个工业体系在空间上扩大,与珠江三角洲一起构成"前店后厂"的地域分工。香港工业在稠密的市区亦形成城市工业地理中的新形态、出现密集的、多层式的各类工业企业在狭小空间上混集,以及工、住用途在同一幢建筑内混集。目前香港工业已到必要的转型阶段。政府需要改变其"自由贸易"政策而采用新的、有力的导向型的政策以营造新工业。同时,香港和珠江三角洲在政策上的合作亦极为必要。     

AGGREGATE LABOUR MARKET DYNAMICS IN HONG KONG

I specify a simple search and matching model of the labour market and estimate it on unemployment and vacancy data for Hong Kong over the period 2000–2010 using Bayesian methods. The model fits the data remarkably well. The estimation shows that productivity shocks are the main driver of fluctuations in the labour market, with cyclical movements in the separation rate playing only a subordinate role. The parameter estimates are broadly consistent with those found in the literature. To replicate the volatility of unemployment and vacancies, the model estimates require a high replacement ratio and a low bargaining power for workers, in addition to two extraneous sources of uncertainty. The estimates are robust to a relaxation of the prior information and small changes in the underlying model specification, which suggests that the data are informative and that the model is well specified. Overall, the Hong Kong labour market can be characterized by having a low degree of churning in normal times, but rapid firings and hirings in recessions and expansions.     

IMMIGRATION, POPULATION HETEROGENEITY, AND EARNINGS INEQUALITY IN HONG KONG

This paper analyzes the heterogeneity effect of immigration on earnings in-equality by decomposing the aggregate measure of total inequality. The analysis shows that a substantial portion of an increase in measured inequality could be due to shifts in shares of heterogeneous population groups caused by immigration policy rather than by widening earnings dispersion within these groups. The analysis is illustrated with census data of Hong Kong from 1981 to 1991. Income redistribution policy based on measured total inequality when there are shifts in population shares could be misguided.     

OIL PRICE VOLATILITY AND U.S. MACROECONOMIC PERFORMANCE

This study uses a model with explicit energy sector linkages to estimate the macroeconomic impacts of the 1986 collapse in energy prices. The model combines features of neoclassical macroeconomics to estimate final demand spending and of general equilibrium analysis to estimate substitution possibilities. The model allows price and wage rigidities yet permits interfuel and input substitutions. The simulation results suggest three conclusions. First, the most significant macroeconomic impact of the 1986 oil price reduction is the sharp drop in inflation. Second, output and employment gains are relatively small due to the sharp drop in energy sector output. Finally, the estimated gain in real output due to lower energy prices is close to the output loss resulting from the trade deficit increase during 1986. This may be one reason why no substantial increase in economic growth occurred following the 1986 collapse in energy prices.     

中国内地公司香港上市:实证分析与理论反思

通过对中国内地在港上市公司发展概况、公司特征等状况的实证统计分析,可以发现尽管内地上市公司已经成为香港市场的重要部分,但不同模式上市的内地公司在行业分布、盈利状况以及市场特征指标上仍存在一定差异。从现实看,尽管内地企业赴港上市符合其微观利益且在短期内无法避免,但从中国金融体系功能完善视角着眼,把优质企业留在内地,夯实内地市场的经济基础是中国金融市场发展进程中至关重要的战略选择。     

TRADE AND WAGE INEQUALITY: THE HONG KONG CASE

Abstract. This paper examines the effects of Hong Kong–mainland China trade on the wage inequality in Hong Kong. Because of the large volume of trade and the large income disparity between these two regions, this empirical study provides a good test of the theories on North–South trade. The econometric analyses show that the relative wage between the skilled and unskilled workers in Hong Kong increased as the share of the volume of Hong Kong's trade with mainland China in Hong Kong's total trade volume rose.     

A DYNAMIC FACTOR MODEL OF ECONOMIC ACTIVITY IN HONG KONG

Abstract. This paper applies the single‐index dynamic factor model developed by J. H. Stock and M. W. Watson to construct (almost) real‐time estimates of economic activity in Hong Kong. The Hang Seng index, a residential property price index, retail sales and total exports are used as coincident indicators. Principal component analysis is first used to obtain an impression of the common component of the indicator series. This component and the dynamic factor identified by the Stock–Watson methodology are strongly correlated and seem to capture economic fluctuations in Hong Kong reasonably well.     

江西与广东,香港的经济合作研究

京九铁路南段（九江以南）使赣粤港三地成为一个紧密联系的经济地带。江西与广东、香港的经济互补性强，具备互惠合作的良好的基础。江西省利用自身优势，抓住当前机遇，采取适当措施，必将实现赣粤港经济融合与江西省的经济腾飞。