How Do the Asian Economies Compete With Japan in the US Market? Is China Exceptional? A Triangular Trade Approach

We apply a trilateral trade approach to examine how Japanese exports and investment to China, or seven other Asian economies, affect Chinese, or the seven Asian economies', exports to the US market. The results suggest that while Chinese and Japanese exports are directly competitive in US markets, Chinese exports to the US are supported partly by Japanese exports to China. The positive correlation between Japanese exports to China and Chinese exports to the US is explained by vertical trade between Japanese multinationals and their affiliates in China. Indonesian and Philippine exports are also competing with Japanese exports in US markets, though the extent of the competition is much higher for China than for these countries.     

Employer risk-adjustment transitions with inertial consumers: Evidence from CalPERS

Risk-adjustment policies, which transfer money from insurers with healthy consumers to those with sick consumers, are an important tool to contend with adverse selection in health insurance markets. While the steady-state properties of risk-adjustment have been studied extensively, there is less evidence on the transition phase of policy implementation. We study the introduction and removal of risk-adjustment at California Public Employees' Retirement System and show that these changes meaningfully impact premiums via plan differences in enrollee health status. Despite these premium differences, there is limited consumer resorting due to consumer inertia, though new active enrollees respond more fluidly. We show that, with inertial consumers, risk-adjustment changes have substantial distributional consequences, leading to worse outcomes for sicker consumers when removed and vice-versa when implemented. We estimate a model of plan choice with premium sensitivity, brand preferences, and inertia and use these estimates to study the interaction between risk-adjustment policies and the strength of inertia.     

The time-series properties of the risk premium in the Yen/Dollar exchange market

In this paper a VAR model is employed to construct a measure of the conditional expectations of the future yen/dollar spot rate. This measure allows us to examine the dynamics of an ex-ante time-series for the risk premium in the market. The VAR model produces ‘better’ forecasts than the survey responses for turbulent periods such as 1981–1982 and 1984–1985. The VAR-generated expectations are then used to construct a risk premium time-series. This risk premium series seems to be more reliable than the ones obtained using either survey data on expectations of the future spot exchange rate or the ex-post realized spot exchange rate. Tests on the risk premium series suggest that a risk premium was present, but that it was virtually constant throughout the sample. The conditional variance of the risk premium changed over time, but its unconditional distribution seemed stable across subsamples. Despite these features, the volatility of the series was substantial and varied considerably throughout the sample.     

Exporting and Upgrading of Product Portfolio: Evidence from Korea,Japan and Indonesia*

This paper examines the effect of exporting on ‘product portfolio upgrading’ in a plant, using plant–product matched datasets for Korea, Japan and Indonesia. First, we find that a substantial part of aggregate shipments growth is explained by net adding of products for all three countries. Second, export starters are more likely to add products and to change product shares in plants than never exporters. Third, added products tend to have higher product quality than dropped products. Therefore, our results imply that the entry to export markets plays an important role in product portfolio upgrading: the process of reallocation from lower‐attribute to higher‐attribute products.     

The futures premium and rice market efficiency in prewar Japan

This article studies the interrelation between spot and futures prices in the two major rice markets in prewar Japan from the perspective of market efficiency. Applying a non‐Bayesian time‐varying model approach to the fundamental equation for spot returns and the futures premium, we detect when efficiency reductions in the two major rice markets occurred. We also examine how government interventions affected the rice markets in Japan, which colonized Taiwan and Korea before the Second World War, and argue that the function of rice futures markets crucially depended on the differences in the structure of rice spot markets. Initially the increased volume of imported rice of a different variety from domestic rice disrupted the rice futures markets. Then, government intervention in the rice futures markets failed to improve the disruption. Changes in colonial rice cropping successfully mitigated the disruption, and colonial rice was promoted in order to unify the different varieties of inland and colonial rice.     

Cointegration and spatial price transmission among wheat and wheat-flour markets in Afghanistan

This article examines cointegration and spatial price transmission among Afghan wheat and flour markets as well as their linkages with those of supplier countries and global markets. Unit root tests, consistent momentum threshold autoregressive (M-TAR) models and vector error correction models (asymmetric and symmetric) are employed to achieve research objectives. The results suggest that provincial wheat and flour markets may have a long-run relationship with principal market of Kabul. Afghan wheat and flour markets may also be cointegrated with their respective global, Kazakh and Pakistani markets. While provincial wheat markets might adjust to divergence from their long-run equilibrium with Kabul wheat market, some of the provincial flour markets may not respond to deviation from their long-run equilibrium with Kabul flour market. The speed of adjustment towards the long-run Afghan–Pakistani and Afghan–Kazakh equilibrium may be faster for Afghan flour than wheat markets. The equilibrium adjustment coefficients are generally small and market imperfections may exist, however. A shock in Kabul wheat and flour markets may have long-lasting effect on the respective provincial markets whereas a shock in global wheat and Pakistani, and Kazakh wheat and flour markets might have transitory effect on the corresponding Afghan markets.     

Remittances and the Dutch disease: evidence from Georgia

In this article, using the VECM model we attempt to empirically examine the Dutch disease effect of remittances in Georgia. The analyses are based on quarterly data covering the years 2000–2016. It is found that an inflow of remittances leads to an appreciation of the real effective exchange rate in the long run, whereas it has the reverse effect in the short run.