Government expenditure,external and domestic public debt,and economic growth

This paper analyzes the relationship between government expenditure, tax on returns to assets, public debt, and growth in an endogenous growth model. Public debt is composed of two components, domestic debt and external debt. We show conditions for existence, uniqueness, and multiplicity of the steady states. More precisely, existence of steady state requires a sufficiently high productivity and a sufficiently low tax on returns to assets. We also provide the effects of an increase in the tax rate on returns to assets on the steady state. In particular, the relation between public spending and the tax rate has a bell shape. Domestic debt unambiguously increases with tax whereas external debt displays an inverted U‐shaped curve. A high tax rate leads to a reallocation of public debt in favor of domestic debt (to the detriment of external debt). The effect of taxation on consumption (and production) also displays a nonlinear pattern when the output elasticity of capital is lower than unity (the effect is monotonously increasing if this elasticity is unity). We also derive the conditions under which a tax increase can boost or reduce the balanced growth rate.     

The effects of multilateral trading systems on risk and return in equity markets

The event study methodology of Brown and Warner (1985) is adopted and augmented to evaluate the effect of the launch of multilateral trading systems on risk and return in equity markets. The methodology is supplemented with various techniques, such as the nonparametric ranking test and kernel regression, to find out if announcements about the introduction of Chi-X Australia generated abnormal returns (ARs). Asset pricing models are fitted with interaction variables, while GARCH, threshold ARCH (TARCH), exponential GARCH (EGARCH) and power-ARCH (PARCH) are used to determine changes in systematic risk. We find evidence in favour of Fisher’s separation theorem and detect a new market anomaly, which we call the ‘Fisher market anomaly’. Our results show that Chi-X system testings affect ARs. Consistent with the adaptive expectations theory, we confirm that the first announcement about the launch of Chi-X affected systematic risk the most. In addition, we identify industry and firm effects in risk analysis.     

Effects of investor tax heterogeneity on stock prices and trading behaviour around the ex-dividend day: the case of Australia

Using a sample of Australian stocks during the 1996–2014 period, this study examines how tax heterogeneity between domestic and foreign investors affects trading behaviour and stock prices around the ex-dividend day. Domestic investors prefer dividends and tend to buy stocks cum-dividend and sell them ex-dividend whereas foreign investors tend to trade in the opposite direction. Abnormal trading turnover increases with tax heterogeneity. Moreover, stocks with a larger domestic investor base are associated with a higher price drop-off ratio on the ex-dividend day and higher market value of franking credits. Overall, our findings support the dynamic dividend clientele hypothesis.     

Measurement of Formal Convergence of Vietnamese Accounting Standards with IFRS

Convergence refers to the process of narrowing the differences between International Accounting Standards/International Financial Reporting Standards (IAS/IFRS) and country‐specific accounting standards. The purpose of this study is to measure the formal convergence between Vietnamese Accounting Standards (VAS) and IAS/IFRS using a fuzzy‐based approach. We assess the extent of convergence between VAS and IAS/IFRS from the perspective of a single standard, clusters of standards and the standards as a whole. The levels of standards convergence are clustered into four categories: full convergence, substantial convergence, substantial difference and complete difference. Our results indicate that the level of convergence between the two sets of standards only achieves mid‐level convergence. The findings of this study should help policy makers improve VAS to meet international standards.     

Asymmetric capital structure adjustments: New evidence from dynamic panel threshold models

We develop a dynamic panel threshold model of capital structure to test the dynamic trade-off theory, allowing for asymmetries in firms' adjustments toward target leverage. Our novel estimation approach is able to consistently estimate heterogeneous speeds of adjustment in different regimes as well as to properly test for the threshold effect. We consider several proxies for adjustment costs that affect the asymmetries in capital structure adjustments and find evidence that firms with large financing imbalance (or a deficit), large investment or low earnings volatility adjust faster than those with the opposite characteristics. Firms not only adjust at different rates but also seem to adjust toward heterogeneous leverage targets. Moreover, we document a consistent pattern that firms undertaking quick adjustment are over-levered with a financing deficit and rely heavily on equity issues to make such adjustment.     

Revisiting Exports and Foreign Direct Investment in Vietnam

Since 1986, Vietnam has undertaken various reform measures in the trade and foreign investment area. This paper finds significant contributions of world trade, and competitiveness and liberalization effects to Vietnam's export growth over the period 1997–2008. Vietnam's exports became more competitive and better complemented the import demand of Vietnam's trade partners. In addition, dynamic comparative advantage became evident in many products, but significant room remains for improving export competitiveness. Foreign direct investment (FDI) inflows also increased and helped stimulate Vietnam's exports. FDI inflows have increased in both the short‐ and long‐term, yet are only of a limited magnitude. This necessitates more effective measures to enhance the linkages between FDI and domestic enterprises.     

Poverty identification: practice and policy implications in Vietnam

To identify poor households, the government of Vietnam applies a combination of proxy means tests and quick collection of income data. This paper examines how well the government's poverty identification reaches the really poor in Vietnam. It is found that there is a large difference between the poverty rate for provinces and districts reported by the government and the rates estimated using expenditure and income data from independent household surveys. There is also a large difference between the poverty status of households identified by local authorities and the poverty status identified by income or expenditure data. More than 50 per cent of the poor households identified by local authorities are not poor in terms of income or expenditure measures. A better identification approach would be to use only proxy means tests and not income data collected using the simple questionnaire.     

Trade facilitation in ASEAN countries: harmonisation of logistics policies

This paper studies the effectiveness of the implementation of trade facilitation measures in member countries of the Association of Southeast Asian Nations (ASEAN). We evaluate trade facilitation performance and indicate trade facilitation needs and priorities that vary between ASEAN members. In particular, we examine logistics‐related costs in ASEAN and whether the current level of logistics‐related costs could be a burden or an advantage for ASEAN countries. We also identify critical barriers that have impacts on logistics services related to foreign investment and customs across ASEAN. Finally, we propose recommendations for the harmonisation of logistics policies in ASEAN countries aimed at the development of the ASEAN Economic Community.     

Finance,growth and (macro)prudential policy: European evidence

Empirica - This paper examines the interactions between financial development, economic growth and (macro)prudential policy on a sample of 12 euro area countries. Our main takeaway is that active...     

Invoice currency choice,nonlinearities and exchange rate pass-through

ABSTRACT

Estimating time-varying thresholds as a proxy for exporter’s predicted exchange rates, this study proposes a new approach to analyse possible asymmetric behaviour of exchange rate pass-through (ERPT) or pricing-to-market (PTM) in Japanese exports between yen appreciation and depreciation periods. Constructing the industry-specific nominal effective exchange rate on a contract (invoice) currency basis, we perform the multivariate threshold near-vector autoregressive (near-MTVAR) estimation and reveal a strong tendency of symmetric ERPT in the short-run, between yen appreciation and depreciation periods. From the 2000s, however, Japanese machinery exporters increased the degree of PTM even in the long-run, while other industries raised the degree of long-run ERPT, reflecting the difference of product differentiation across industries. This evidence has significant implications for the recent unresponsiveness of the Japanese trade balance to the large depreciation of the yen.