Is China's Antidumping More Retaliatory than that of the US?

Antidumping (AD) investigations are widespread. China and the US are two big users and targets of AD investigations. They, respectively, represent developing and developed countries on one hand, and new AD users and traditional AD users on the other. In this paper, using AD filing data of these two countries from 1991 to 2005, we explore whether China's AD is more retaliatory than that of the US. Our results obtained from negative binomial models with maximum likelihood techniques show that although both countries have some degree of retaliatory incentives in their AD filings, China is not more (or may even be less) retaliatory than the US. We also compare the two countries' similarities and differences in their AD responses to other factors such as macroeconomic conditions, contagions, and geographical distance.     

Long- and short-run determinants of capital flows to Latin America: a long-run structural GVAR model

This article documents the determinants of capital flows to Argentina, Brazil and Mexico, assessing the relative importance of domestic and international factors through the estimation of a long-run structural Global VAR model of the world economy. The results show that in the long-run international factors prevail on domestic factors as determinants of the equilibrium behaviour of Net Foreign Assets (NFA) and also provide overwhelming evidence that domestic shocks are predominantly responsible for their short-run dynamics. Although all previous studies focus on the US economic influence, one striking result of this article is that the US variables are by no means the main external factors affecting Latin American NFA.     

The contribution of domestic, regional and international factors to Latin America's business cycle

This paper quantifies the relative contribution of domestic, regional and international factors to the fluctuation of domestic output in six key Latin American (LA) countries: Argentina, Bolivia, Brazil, Chile, Mexico and Peru. Using quarterly data over the period 1980:1-2003:4, a multi-variate, multi-country time series model was estimated to study the economic interdependence among LA countries and, in addition, between each of them and the three world largest industrial economies: the US, the Euro Area and Japan. Falsifying a common suspicion, it is shown that the proportion of LA countries' domestic output variability explained by industrial countries' factors is modest. By contrast, domestic and regional factors account for the main share of output variability at all simulation horizons. The implications for the choice of the exchange rate regime are also discussed.     

Choosing sides in the trilemma: international financial cycles and structural change in developing economies

ABSTRACT

This paper analyzes the impact of international financial cycles on structural change in developing economies. It is argued that the impact of these cycles depends on the specific combination of macroeconomic and industrial policies adopted by the developing economy. The cases of Brazil and Argentina are contrasted with those of Korea and China. In the Asian economies, macroeconomic policy has been a complementary tool along with industrial policy to foster the diversification of production and capabilities. Inversely, in the case of the Latin American countries, long periods of real exchange rate (RER) appreciation, combined with the weaknesses (or absence) of industrial policies, contributed to the loss of capabilities and lagging behind.     

On the Transmission Mechanism of Monetary Constraints to the Real Side of the Economy

Contrary to the predictions of the theory underlying international finance, inflows of capital triggered by financial liberalisation have neither equalised real interest rates nor increased income growth in many emerging economies. We explain this puzzle by developing a model that combines the balance‐of‐payments constraint approach to economic growth with a less stringent version of the real interest rate parity hypothesis. The model’s foundations are based on robust empirical findings or well‐established macroeconomic models. We show that a perverse combination of income elasticities of demand for imports and exports generates slow income growth and high real interest rates. As domestic income grows and imports rise faster than exports, the real exchange rate is expected to depreciate in order to clear the balance of payments (or the foreign exchange rate market). An incipient capital outflow arises and interest rates increase. Faster adjustment in capital rather than in the goods market therefore generates a higher real interest rate differential between the domestic small open‐economy and the rest of the world. The long run analysis shows that a constant degree of risk aversion implies a positive equilibrium real interest rate differential that affects economic growth. A permanent increase in default risk driven by persistent current account imbalances thus impacts on long run growth. The model’s results are illustrated with evidence from the three major Latin America economies: Argentina, Brazil and Mexico.     

Productivity,Structural Change and Latin American Development

We calibrate a simple neoclassical growth model adapted to illustrate a process of structural transformation or industrialization to a group of nine South American countries. The paper shows that low levels of agricultural productivity can substantially delay the process of industrialization, which, together with low levels of non‐agricultural productivity observed in recent decades, satisfactorily explains the significant differences in gross domestic product (GDP) per capita levels among the countries in our sample. The results suggest that Argentina underwent the process of industrialization first followed by Uruguay, Chile, Brazil, Colombia, Ecuador, Peru, Paraguay and Bolivia. The model predicts that the ranking of these countries in terms of GDP per capita would follow this order until convergence occurs. The empirical evidence confirms the prediction of the model with the exceptions of Uruguay and Chile which caught up with Argentina in terms of GDP per capita levels in the late 1980s.     

不同汇率制度下汇率传递时滞的实证分析——基于中国、日本、巴西、阿根廷四国数据

本文采用向量误差修正模型及脉冲响应函数,选取中国、日本、巴西和阿根廷作为样本,运用1996-2009年的季度数据,分别对四国的汇率传递时滞进行实证分析。研究表明:不同汇率制度下,汇率变动对国内物价水平的影响存在差异,汇率传递均存在时滞。固定汇率制度下,汇率传递效应的时滞更长;在相对浮动的汇率制度下,汇率传递的时滞相对较短。本文样本中,中国的汇率传递时滞最长,为18个月。因此,在人民币汇率制度改革过程中,确定汇率波动区间以及考察汇率政策效果时,需要考虑汇率波动对国内物价影响时滞的长短。同时,受我国外汇市场化程度的影响,货币当局应当合理引导汇率预期,以适应货币政策目标的需要。     

Differences in the determinants and targeting of antidumping: China and India compared

Despite both being developing countries, China and India have markedly contrasting patterns in their use and targeting of antidumping (AD) measures. We explore the factors driving AD use by these two countries, considering in turn macroeconomic, strategic and other determinants. We find more regular or systematic features of AD use by China, while India displays a less systematic pattern of AD use. Economic growth, AD club effect and free trade agreement participation are shown to constrain AD use by China. Compared to India, AD use by China is also more sensitive across industries. Furthermore, China targets developed countries more than developing countries, while India is less discriminating with respect to the country type it targets.     

Assessing the Impacts of Capital Inflows on Domestic Economy across the Sub-Saharan Africa Countries

Using GMM models, this paper analyzes the impacts of capital inflows on domestic investment in 44 Sub-Saharan Africa (SSA) countries from 2003–2012. It is found that foreign direct investment across the SSA remains to be the largest percentage share, accounting for 35% of the total capital inflows. FDI inflows have significant positive impacts on domestic investment across the SSA in both short term and long term. Other key macroeconomic factors such as age dependency ratio, domestic economic growth, terms of trade, real effective exchange rate and trade openness also play vital roles in determining domestic investment.     

The transmission of world commodity prices to domestic markets under policy reforms in developing countries

This paper examines the degree to which world price signals have been transmitted into domestic prices for eight countries and ten commodities, a total of 31 country/commodity pairs. The main characteristic of these countries was that they all undertook substantial policy reforms during the mid‐1980s to early 1990s. The paper investigates the effect of reforms on the speed at which signals were transmitted to domestic markets and on the extent of price transmission. We find that Chile, Mexico, and Argentina are the only countries whose domestic commodity markets were integrated with world markets. For the remaining cases (Ghana, Madagascar, Indonesia, Egypt, and Colombia) in only a few country/commodity pairs is there some passthrough of world price changes. In terms of the effects of policy reforms, in the majority of the cases the hypothesis of a structural break following the reform year is rejected.     

Taxation of International Private Capital Flows and Securities Transactions in Developing Countries: Do Public Finance Considerations Augment the Macroeconomic Dividends?

This paper examines policies to tax international private capital flows and securities transactions in developing countries. Many recent studies focus on the macroeconomic dividends associated with these policies (namely, their contribution to macroeconomic and financial stability and lengthened investor time horizons). In this paper I explore whether the potential of these policies to raise much‐needed tax revenues in developing countries augments their well‐known macroeconomic benefits. To my knowledge, there has been no effort to examine systematically the public finance issues related to the taxation of international private capital flows or securities transactions in the developing country context. I conclude that the public finance implications of these policies in middle‐income developing countries offers additional support to the macroeconomic case for them. To different degrees, taxation of international private capital flows and securities transactions has the potential to raise modest revenues in middle‐income countries. However, far more important is the potential of these policies to offer valuable macroeconomic dividends on the national level. These national macroeconomic dividends have the potential to bear fruit globally. This is because experiences with financial contagion over the last decade suggest that global financial stability can be enhanced via the promotion of domestic financial stability in developing countries.     

Macroeconomic consequences of state fragility in sub‐Saharan Africa

Are poor macroeconomic outcomes primarily the result of economic policies, or of deeper underlying state fragility problems in sub‐Saharan Africa? We attempt to answer this question by using carefully specified dynamic panel regression techniques to show how state fragility conditions help to explain the differences in the macroeconomic performance of sub‐Saharan African economies, and to identify the most plausible mechanisms of transmission. We find that countries with greater fragility suffer higher macroeconomic volatility and crisis; they also experience weaker growth. When we disaggregate state fragility into its various components, we find that it is the security and social components that have the strongest causal impact on macroeconomic outcomes, while the political component is, at best, weak. Therefore, we conclude that it is state fragility conditions, and not necessarily macroeconomic policies, that are of first‐order importance in explaining the differences in macroeconomic performance for African countries. The knock‐on effects are mostly mediated through the fiscal channel, the aid channel, and the finance channel. Accordingly, we recommend that interventions in fragile states should best focus on exploiting the potential for using fiscal policy, aid, and finance as instruments to improve macroeconomic outcomes in sub‐Saharan Africa.     

BUSINESS CYCLES IN SINGAPORE: STYLIZED FACTS FOR A SMALL OPEN ECONOMY

This paper sets out to discover the salient characteristics of economic fluctuations in the small open economy of Singapore. To this end, band‐pass filters and unobserved components models are first used to extract the cyclical components in macroeconomic variables. The extent to which domestic business cycles are influenced by foreign economic cycles with regards to their persistence, comovement and volatility properties are then assessed using time‐series statistics. The paper also documents how shocks originating from abroad are propagated to the broader economy. Although it is found that idiosyncratic features are present in Singapore's macroeconomic fluctuations, there are also stylized business cycle facts to be learnt about small open economies in general.     

Forecast accuracy of small and large scale dynamic factor models in developing economies

Developing economies usually present limitations in the availability of economic data. This constraint may affect the capacity of dynamic factor models to summarize large amounts of information into latent factors that reflect macroeconomic performance. This paper addresses this issue by comparing the accuracy of two kinds of dynamic factor models at GDP forecasting for six Latin American countries. Each model is based on a dataset of different dimensions: a large dataset composed of series belonging to several macroeconomic categories (large scale dynamic factor model) and a small dataset with a few prescreened variables considered as the most representative ones (small scale dynamic factor model). Short‐term pseudo real time out‐of‐sample forecast of GDP growth is carried out with both models reproducing the real time situation of data accessibility derived from the publication lags of the series in each country. Results (i) confirm the important role of the inclusion of latest released data in the forecast accuracy of both models, (ii) show better precision of predictions based on factors with respect to autoregressive models and (iii) identify the most adequate model for each country according to availability of the observed data.     

Fundamentals versus external shocks: Brazil's growing exposure to currency crises

While financial globalization does not lack theoretical economic merit, the more far-reaching practical consequences of this phenomenon are often not fully appreciated from the vantage point of North America or the European Union. In particular, globalization can make it more difficult for emerging economies to achieve macroeconomic stabilization. This is especially true if the countries in question have chosen the vehicle of pegged exchange rates as an important element of domestic anti-inflation policy. The chief macroeconomic difficulties for emerging economies in a world of volatile capital flows can include a loss of monetary control, a real appreciation of the domestic currency, and a worsening of economic fundamentals leading to damaging currency crises. This paper concentrates on the recent experience of Brazil as illustrative of the abject plight faced by many developing countries attempting to secure economic stabilization against the background of the present globalized international economy.This paper has benefitted from discussion with participants of the Forty-Sixth International Atlantic Economic Conference, Boston, MA, October 8–11, 1998.     

Rara Avis: Latin American populism in the 21st century

Since the beginning of the 21st century, many Latin American countries have been ruled by governments characterized as populist (the so-called new Latin American Left). We focus on the macroeconomic implications of the policies adopted by these governments (instead of their leaders’ rhetoric) and we investigate to what extent this characterization holds. In particular, we focus on their wage policies by doing a Structural Vector Autoregressive analysis and assuming that populist shocks have no long-run effects on real wages. This identification implies that populist leaders prioritize redistribution through nominal wages disregarding the evolution of productivity. The results indicate that economic populism is not as widespread as previously thought. Instead, our approach leads to more nuanced results: while we find that there is populism in Argentina, the results for Brazil, Bolivia and Ecuador show only sporadic populist events. In the remaining countries, we do not find persistent economic populism.     

Macroeconomic Uncertainty and Performance in Asian Countries*

We use a very general bivariate GARCH‐M model and quarterly data for five Asian countries to test for the impact of real and nominal macroeconomic uncertainty on inflation and output growth. We conclude the following. First, in the majority of countries uncertainty regarding the output growth rate is related negatively to the average growth rate. Secondly, contrary to expectations, inflation uncertainty in most cases does not harm the output growth performance of an economy. Thirdly, inflation and output uncertainty have a mixed effect on inflation. Consistent results are found using the VAR‐GARCH‐M approach to investigate the dynamic relationship between inflation and output growth using impulse response functions. This evidence implies that macroeconomic uncertainty may even improve macroeconomic performance, i.e. raise output growth and reduce inflation. Our empirical results highlight important differences with those for industrialized countries.     

Germany in crisis: the unification challenge,macroeconomic policy shocks and traditions,and EMU

Conventional wisdom blames Germany's ongoing economic and fiscal crisis on the unification shock of the early 1990s and structural problems in labour markets. Challenging this view, this paper offers a fresh assessment that focuses on macroeconomic demand management. It is shown that Germany's fiscal crisis cannot be attributed to unification per se; it arose as a consequence of ill‐guided macroeconomic policies pursued in response to that event. Many structural problems that popped up along the way were mere symptoms of persistent macroeconomic mismanagement and protracted domestic demand stagnation. Arguably, systematically ill‐guided macroeconomic policies of this type are potent enough to wreck any real world economy, no matter how flexible it may be. Because Germany provided the blueprint for Europe's stability‐oriented macroeconomic policy regime, it comes as no surprise that a peculiar repeat of certain symptoms that started to arise in Germany a decade ago may now be observed across the euro area—protracted domestic demand weakness and inflation stickiness because of ‘tax‐push inflation’ in particular.     

The Trade Effects of Indian Antidumping Actions

Antidumping (AD) has emerged as the most widespread policy impediment to trade in the last 25 years. One of the surprise proliferators of AD in the lesser developed world has been India, which has filed an outstanding number of 285 cases between 1992 and 2002. In this paper, I study empirically the effect of Indian AD cases on trade flows from other countries. I also look at the effect of AD cases on trade diversion from countries subject to or “named” in AD investigations to non‐subject or “non‐named” countries and conclude that Indian AD policy is effective. I use a unique dataset combining AD data from the World Trade Organization with trade data from Comtrade. The empirical model is estimated via the Arellano–Bond procedure.     

DETERMINANTS OF CAPITAL FLIGHT FROM ARGENTINA, BRAZIL, AND MEXICO

This paper derives four alternative measures of "hot money" outflows of capital from Latin America's three major debtors–Argentina, Brazil, and Mexico. These measures are based on two sources of quarterly data from 1977 to 1986: (i) the balance of payments statistics and (ii) changes in the U.S. bank deposits of non-banking entities in the debtor countries. The portfolio adjustment model then is used to specify the factors influencing capital flight. These factors are grouped into two types. The push factors relate to characteristics of the so-called source countries for capital flight and include the interest and inflation rates, the degree of currency overvaluation, and the environmental risks embodied in both frequent regime changes and the onset of the 1982 debt crisis. The pull factors include the interest and inflation rates in the host country, the United States. The principal findings of the paper show that the push factors alone are significant in explaining capital outflows from Argentina and Brazil. For Mexico, by contrast, the push factors as well as the pull factors are found to be relevant in explaining the behavior of flight capital, as measured by changes in the deposits of Mexican non-bank entities in the U.S. banking system.