Monetary autonomy in selected Asian economies: The role of international reserves

With the increased financial integration of Asian countries, monetary policy takes on the additional role of maintaining the stability of the financial system along with the traditional objectives of promoting growth and employment with price stability. Given the importance and relevance of monetary policy in Asian countries, we examine monetary autonomy and its interaction with financial integration, currency regimes and international reserves for the past two decades in the following Asian countries: Thailand, Korea, Indonesia, the Philippines, and India. The empirical analysis reveals two significant and interesting findings that have policy implications. First, Thailand, Korea and Indonesia, countries that have moved towards a floating currency regime, experienced simultaneous declines in the sensitivity of their interest rates (thereby increasing monetary autonomy), while India continues to increase the sensitivity of its interest rates with a pegged exchange rate and increased financial integration. Second, in all of the studied economies, the accumulation of international reserves has contributed, to some extent, to the retention of monetary autonomy in terms of preventing the sensitivity of the interest rates from rising. We speculate that the accumulation of reserves plays the role of an anchor for monetary autonomy in emerging market economies facing a “fear of floating”.     

On the determinants of exporters' currency pricing: History vs. expectations

The purpose of this paper is to investigate why the choice of invoice currency under exchange rate uncertainty depends not only on expectations but also on history. The analysis is motivated by the fact that the US dollar has historically been the dominant vehicle currency in developing countries. The theoretical analysis is based on an open economy model of monopolistic competition. When the market is competitive enough, the exporting firms tend to set their prices not to deviate from those of the competitors. As a result, a coordination failure can lead the third currency to be a less efficient equilibrium invoice currency. The role of expectations is important in selecting the equilibrium in the static framework. However, in the dynamic model with staggered price-setting, the role of history becomes another key determinant of the equilibrium currency pricing. The role of history may dominate the role of expectations when the firms are myopic, particularly in the competitive local market. It also becomes dominant in the staggered price setting when a fraction of the new price setters are backward-looking. The result suggests the importance of history in explaining why the firm tends to choose the US dollar as vehicle currency. J. Japanese Int. Economies 20 (4) (2006) 548–568.     

Export–Oriented Foreign Direct Investment and Local Content Requirement

We develop a model in which foreign firms locate in a host country and export their produce to another (consuming) country. We consider both exogenous and endogenous numbers of foreign firms. These firms compete with domestic firms in the consuming country under oligopoly. Unemployment exists in both countries. We analyse the conflict of interest between the two countries on the level of local content for the foreign firms. Under free entry of foreign firms, the consuming country may want a less severe restriction on local contents than the host country, but not so when the number of foreign firms is exogenous.     

Agricultural mechanisation and gendered labour activities across sectors: Micro-evidence from multi-country farm household data

The gender difference in employment across sectors is a critical element of gender inequality in rural livelihoods and welfare in developing countries. The role of production technologies, including agricultural mechanisation, in addressing gender inequality is increasingly explored. Knowledge gaps remain, however, including how agricultural mechanisation differentially affects labour engagements across sectors. This study aims to partly fill these knowledge gaps through micro-evidence from seven countries (Ethiopia, Ghana, Nigeria, Tanzania, India, Nepal and Vietnam), using several nationally representative panel data and supplementary data and applying correlated random effects double-hurdle models with instrumental variables. We find that the use of tractors and/or combine harvesters by the household induces a greater shift from farm activities to non-farm activities by female members than by male members. While statistical significance varies, these patterns generally hold consistently across all seven countries studied. These patterns also hold across different farm sizes. While these are short-term relations, agricultural mechanisation proxied by tractors and/or combine harvesters is one of the crucial contributors to gendered rural livelihood. Future studies should more closely investigate these patterns' underlying mechanisms and implications.     

Research Note: Statistical Analysis on E-mail Magazines used by Japanese Prime Ministers

This paper presents a multiple regression analysis of the relationship between the frequencies of political keywords on cabinet e-mail magazines and cabinet approval ratings from the period of April 2001 to September 2009 in Japan. The authors found that Prime Minister Junichiro Koizumi was the only Prime Minister who utilized a cabinet e-mail magazine as a strong political tool. Other prime ministers from the Liberal Democratic Party failed to utilize this type of magazine as a tool. In addition, we concluded that Japanese voters did not highly value the Koizumi Cabinet’s economic performance, but highly evaluated its message in the electronic information space of political economy.     

Rise and Fall of Multinational Enterprises in Vietnam: Survival Analysis Using Census Data during 2000–2011*

This study examined the survival of multinational enterprises (MNE) in Vietnam during 2000–2011 using Cox hazard models. The characteristics and ownership structure of firms and the nationality of foreign partners are found to be associated with the probability of firm exit, with a firm having greater capital share of foreign partners surviving longer. An efficient local government requiring less time for bureaucratic procedures and inspections is found to be associated with a lower probability of MNE exiting. Meanwhile, transparency in business regulations and predictability in implementing central government policies accelerate the survival of highly competitive MNE.     

Are companies for sale? The Japanese say "iie" (no)

Mergers and acquisitions are a major fact of corporate life in Britain and the US: not so in Japan. The reason is a very different approach to human resource management. Businesses, to the British, are something to be bought and sold like commodities. To the Japanese they are places for people to work together. As a result hostile takeovers are virtually unknown in Japan. Mergers and acquisitions are however, used when internal expansion is found to be inefficient, in particular to diversify into new areas of business. The threat of hostile takeover—the so-called "market for corporate control"—is often regarded as an important spur to corporate efficiency in Britain and the US. The Japanese management system provides incentives of a different nature. Thus the Japanese emphasise a long term view of companies' growth. They value internal expansion through innovation and capital investment. And they undertake extensive training as part of a long term company worker relationship.     

WHAT EXPLAINS THE DIFFERENCE IN THE EFFECT OF RETIREMENT ON HEALTH? EVIDENCE FROM GLOBAL AGING DATA

This paper analyzes the reasons for differences in the estimated effect of retirement on health in previous studies. We investigate these differences by focusing on the analysis methods used by these studies. Using various health indexes, numerous researchers have examined the effects of retirement on health. However, there are no unified views on the impact of retirement on various health indexes. Consequently, we show that the choice of analysis method is one of the key factors in explaining why the estimated results of the effect of retirement on health differ. Moreover, we re‐estimate the effect of retirement on health by using a fixed analysis method controlling for individual heterogeneity and endogeneity of the retirement behavior. We analyze the effect of retirement on health parameters, such as cognitive function, self‐report of health, activities of daily living (ADL), depression, and body mass index in eight countries. We find that the effects of retirement on self‐report of health, depression, and ADL are positive in many of these countries.     

Capital gains tax and individual trading: The case of Japan

Japan implemented a capital gains tax reform and reduced its flat rate in 2003. This study attempts to explain how this has contributed to the recent surge of individual trading, using three different methods of analysis. First, we perform a time-series analysis with the aggregate, market-level data. Second, we use firm-level, by-stock data to conduct a similar time-series analysis, as well as a panel data analysis. Third, we examine the price-change sensitivity of winners’ volume before and after the reform. The results clearly indicate that the tax cut has helped expand individual trading, as the average tax rate negatively correlates significantly with individual trading.