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.     

The market price of fiscal uncertainty

Recent fiscal interventions have raised concerns about US public debt, future distortionary tax pressure, and long-run growth potential. We explore the long-run implications of public financing policies aimed at short-run stabilization when: (i) agents are sensitive to model uncertainty, as in Hansen and Sargent (2007), and (ii) growth is endogenous, as in Romer (1990). We find that countercyclical deficit policies promoting short-run stabilization reduce the price of model uncertainty at the cost of significantly increasing the amount of long-run risk. Ultimately these tax policies depress innovation and long-run growth and may produce welfare losses.     

Anticipating independence,no premonition of partition. The lessons of bank branch expansion on the Indian subcontinent, 1939 to 1946

We examine investment in bank branches on the Indian subcontinent in 1939 and 1946. In 1947, the states of India and Pakistan were created from the erstwhile colony of British India. Partition was destabilizing to both economies. We use branch expansion as a proxy for entrepreneur's pre‐partition predictions of the future of these regions. Our results indicate there were no premonitions of economic dislocation. Banks tended to deepen their presence in regions which were already developed. But controlling for the level of 1931 development, branch placement was highest in exactly those regions, Bengal and the Punjab, which were to experience the greatest negative consequences from political division. After 1947, multiple banks failed; most failing banks were registered in the Punjab or Bengal region. In United India, businessmen saw as much promise in regions which were to become Pakistan as in regions which were to become India. After partition, the Pakistan regions were immediately more economically fragile. This event provides a general lesson. Economic integration had intensified over the years of British rule. The abrupt stop to integration harmed especially the smaller, less diversified region. Politicians should be wary of politically dividing regions which have evolved to function as integrated economic units.     

Liquidity commonality in commodities

We examine liquidity commonality in commodity futures markets. Using data from 16 agricultural, energy, industrial metal, precious metal, and livestock commodities, we show there is a strong systematic liquidity factor in commodities. Liquidity commonality was present in 1997–2003 when commodity prices were relatively stable and during the recent boom. There is some support for both “supply-side” and “demand-side” explanations for this commonality. We find no evidence of a consistent link between stock and commodity liquidity in general. Energy commodities appear to provide a better hedge against equity market liquidity risk than the other commodity families.     

ETF arbitrage: Intraday evidence

We use two extremely liquid S&P 500 ETFs to analyze the prevailing trading conditions when mispricing allowing arbitrage opportunities is created. While these ETFs are not perfect substitutes, our correlation and error correction results suggest investors view them as close substitutes. Spreads increase just before arbitrage opportunities, consistent with a decrease in liquidity. Order imbalance increases as markets become more one-sided and spread changes become more volatile which suggests an increase in liquidity risk. The price deviations are followed by a tendency to quickly correct back towards parity.     

Corporate governance and risk-taking: Evidence from Japanese firms

This paper examines the influence of corporate governance on the risk taking of Japanese firms. We show that family control and ownership concentration are associated with higher idiosyncratic risk, whereas bank control has the opposite effect. Considering the link between idiosyncratic risk and firm performance, the results provide an economic rationale for the higher (lower) performance of family-controlled firms (bank-controlled firms). The results also explain the higher performance of firms with concentrated ownership by relating their governance structures to the risk-taking strategies that generate greater competitive advantages. Finally, we show that the impact of governance structures on risk taking is stronger after controlling for endogeneity.     

The Plausibility of Agriculture-Led Development

Within the context of a simple dynamic general equilibrium framework, the model proposed in this paper formally characterizes the path in which a successful transformation in agriculture as a result of an improvement in agricultural technology can conceivably help some developing countries raise rural income, which in turn boosts effective demand for domestically produced, labor-intensive manufactured goods. Consequently, the price of nontraded manufactures goes up, leading to higher production in this sector, and subsequently higher wages. In the longer run, higher wage levels would result in larger aggregate savings, which in turn finances the economy's industrialization.     

Exploring Electronic Word-of-Mouth (eWOM) in The Consumer Purchase Decision-Making Process: The Case of Online Holidays – Evidence from United Kingdom (UK) Consumers

This study explores the role of electronic word-of-mouth (eWOM) in the consumer decision-making process when purchasing a holiday. Using an ethnographic approach, it explores the role of eWOM on consumers’ attitudes toward online reviews (eReviews) and their subsequent behavior. Across the consumer decision-making processes – information search, evaluation, and purchase – the study develops a conceptual framework with three eWOM dimensions: (1) motivation, (2) source, and (3) content. Findings explore the variations of eWOM’s influence across the decision-making stages with implications for theory and practice. The study further highlights implications for segmentation practices in the tourism industry.