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”.     

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.     

Inflation Targeting and the Pass‐through Rate in East Asian Economies

There has been serious debate regarding whether the inflation targeting (IT) framework for the emerging market economies has been an effective nominal anchor. Focusing on Korea, Thailand and the Philippines, this article aims to contribute to the debate by providing empirical evidence on a decline in the ‘pass‐through’ effect with IT adoption. Our main findings are as follows. First, under the IT framework, Korea has followed an inflation responsive rule in a forward‐looking manner, while Thailand has adopted the rule in a backward‐looking manner. Second, only Korea experiences a reduction in the pass‐through effect under IT adoption, thereby showing a linkage between the forward‐looking inflation responsive rule and the pass‐through effect. Finally, a test of the sensitivity of inflation expectations to external price shocks in Korea supports this linkage.     

Land-Tax, Transfer and Growth in an Endogenously Growing Economy with Overlapping Generations

In this paper we investigate the effect of a tax on land rent on the growth rate of capital in a growing economy with overlapping generations. A tax on land rent has a potential to increase the growth rate of capital. If the model is extended to allow the tax revenue to be refunded to individuals, a tax on land rent may deter growth to the extent that the tax revenue is transferred to the older generation.
JEL Classification numbers: H31, O41.     

Official Statistics on ICT in Japan

Taking into account the developments of ICT in recent years, a lot of countries are dealing with the preparation of statistics on ICT. In Japan, the Basic Law on Formation of an Advanced Information and Telecommunications Network Society (Basic Law on IT) was enforced on January 6, 2001, in which the Government is obliged to prepare official statistics related to ICT. In Japan, at least 41 kinds of official statistical surveys, including questions related to ICT, have been conducted in the past five years. Their main purpose, survey items and survey methods are various and different from each other. To grasp the new development in IT as a whole, “IT Indicators in Japan”, which is a new compendium on ICT, was compiled in 2001. Also, “Information and Communications in Japan”, which is a white paper published in 2001, presented basic data on the extent to which IT has permeated the economic activity and people's lives. In addition, the 11th revision of the Japan Standard Industrial Classification (JSIC) was published by the Statistical Standards Department, Statistics Bureau, Ministry of Public Management, Home Affairs, Posts and Telecommunications (MPHPT) in March 2002 in response to the change of economy and society including the development of ICT. The Working Group on Indicators for the Information Society of OECD has been working for several years in order to prepare internationally comparable and statistically measurable ICT indicators and related ICT statistics. In this paper, an overview of the present situation of Japanese official statistics related to ICT is given with some analysis. In addition, some problems are raised which should be considered from the viewpoint of the necessity and measurability and so on for the appropriate preparation of ICT indicators and e‐commerce‐related statistics. “IT; Information Technology” and “ICT; Information and Communications Technology” are often used without any distinction. “ICT” is used in this paper except where “IT” is used as a proper noun, as it is considered almost the same as “IT”. The views expressed herein are those of the author, and are not necessarily those of the Statistical Standards Department or any other Japanese government authorities.     

Monetary autonomy in emerging market economies: The role of foreign reserves

This paper examines trends in monetary autonomy and their interactions with financial integration, currency regimes and foreign reserves for recent decades in emerging Asian and Latin American economies. Our main findings are the following: First, most emerging Asian economies have increased monetary autonomy mainly due to changes in currency regimes toward floating regimes, while emerging Latin American economies have shown mixed results on monetary autonomy. Second, in all sample economies, the accumulation of foreign reserves has contributed to retaining monetary autonomy, probably implying the role of foreign reserves as an anchor for monetary autonomy in emerging market economies.     

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.     

A search model of two-sided matching under nontransferable utility

In a decentralized marriage market there are different types of men and women. Agents sequentially search for mating partners and meet bilaterally in a random fashion. Upon meeting, the paired agents complete mating if both agree, and separate and continue searching otherwise. The polarization of interests between men and women appears as in Gale-Shapley marriage problems; as agents of one sex become more selective about their mates, agents of the other sex lose. As search costs disappear, the set of equilibrium outcomes in a search model reduces to the set of stable matchings in a corresponding Gale-Shapley marriage problem.     

Exploring the causal relationship between hospital length of stay and re-hospitalization among Japanese AMI patients

We explore the causal relationship between hospital length of stay (LOS) and re-hospitalization for Acute Myocardial Infarction (AMI) patients in Japan, where the average LOS is the longest among OECD countries. Using chart-based data, we address the endogeneity between LOS and re-hospitalization probability by using an exogenous variation based on Rokuyo (the six basic labels allocated to each day), which is found to be irrelevant to admission day but relevant to discharge day. While we do find a significant and positive association between LOS and re-hospitalization probability in the OLS estimation, we do not find a significant relationship once LOS is instrumented by Rokuyo in various instrumental variable estimations. This implies that additional stay that was induced owing to patient’s choice of preferred Rokuyo at discharge has no effect on re-hospitalization probability.     

On the inclusiveness of rural road improvement: Evidence from Morocco

This paper explores the heterogeneous impact of a rural road improvement project on the economic activities and living standards of households in Morocco. Road pavement improvements are expected to promote better market access, encourage the transformation of traditional agricultural activities, and create opportunities for new economic activities. However, benefits may not extend evenly across different groups, and the distributional consequences call for careful empirical investigation. We employ a difference-in-differences (DID) estimation using a household-level panel dataset collected under a quasi-experimental setting in the 2010s. We classify households into three groups based on asset holdings (rich, middle, and poor). We provide several new findings. First, there was no significant transformation of agricultural production or sales for all groups. Second, rich households increased hired agricultural labor and began paid employment while middle households started new family businesses. Poor households, however, did not enjoy these new employment opportunities except for a marginal increase in family businesses. Third, due to shifts in employment, the rural road renewal project improved household consumption 3%–4% annually for rich and middle households, an impact not clearly seen among poor households. Thus, our findings show that the economic benefits of rural road improvement might not be well-inclusive.