Exchange Rate Pass‐through and Currency Invoicing: Implications for Monetary Integration in East Asia

Exporter's price‐setting behaviour and currency invoicing play a key role in the literature on the new open‐economy macroeconomics. This paper estimates exchange rate pass‐through coefficients for the exports of four ASEAN countries: Indonesia, Malaysia, the Philippines and Thailand. In addition, previous estimates of pass‐through as well as invoicing behaviour in East Asia are discussed in the context of regional integration. The new pass‐through coefficients are estimated under two alternate specifications for up to 34 goods for each of the four ASEAN countries destined for up to 13 major markets. The results suggest: (a) little pass‐through is occurring in Southeast Asia and (b) this lack of pass‐through is more likely attributable to the fact that they are small countries in a relatively integrated market, rather than evidence of pricing to market. The implications for regional monetary integration of this apparently low degree of pass‐through are detailed.     

Metaheuristic algorithms for the multistage hybrid flowshop scheduling problem

We consider the multistage hybrid flowshop scheduling problem, in which each stage consists of parallel identical machines. The problem is to determine a schedule that minimizes the makespan for a given set of jobs over a finite planning horizon. Since this problem class is NP-hard in the strong sense, there seems to be no escape from appealing to heuristic procedures to achieve near-optimal solutions to real life problems. First, a series of new global lower bounds to be used to estimate the minimum makespan are derived. Then, two new metaheuristic algorithms first sequence and then allocate jobs to machines based on a particular partition of the shop. The optimization procedure is based on simulated annealing and the variable-depth search. Computational experiments show the efficiency of the proposed procedures.     

The SIML Estimation of Integrated Covariance and Hedging Coefficient Under Round-off Errors,Micro-market Price Adjustments and Random Sampling

For estimating the integrated volatility and covariance by using high frequency data, Kunitomo and Sato (Math Comput Simul 81:1272–1289, 2011; N Am J Econ Finance 26:289–309, 2013) have proposed the separating information maximum likelihood (SIML) method when there are micro-market noises. The SIML estimator has reasonable finite sample properties and asymptotic properties when the sample size is large when the hidden efficient price process follows a Brownian semi-martingale. We shall show that the SIML estimation is useful for estimating the integrated covariance and hedging coefficient when we have round-off errors, micro-market price adjustments and noises, and when the high-frequency data are randomly sampled. The SIML estimation is consistent, asymptotically normal in the stable convergence sense under a set of reasonable assumptions and it has reasonable finite sample properties with these effects.     

Defending Home against Giants: Exclusive Dealing as a Survival Strategy for Local Firms*

We consider exclusive contracts a survival strategy for a local incumbent manufacturer facing a multinational manufacturer's entry. Although both manufacturers prefer to trade with an efficient local distributor, trading with inefficient competitive distributors is acceptable only to the entrant, because of the entrant's efficiency. Hence, such competitive distributors can be an outside option for the entrant. As the entrant becomes efficient, the outside option works effectively, implying that the entry does not considerably benefit the efficient local distributor. Thus, the local manufacturer is more likely to sign an anticompetitive exclusive contract with the efficient distributor as the entrant becomes efficient.     

The effect of corruption on the manufacturing sector in India

This article investigates the effects of corruption on the performance of the manufacturing sector at the state level in India. We employ conviction rates of corruption-related cases as an instrument for the extent of corruption, address the underreporting problem, and examine the impact of corruption on the gross value added per worker, total factor productivity, and capital-labor ratio of three-digit manufacturing industries in each state. Our estimation results show that corruption reduces gross value added per worker and total factor productivity. Furthermore, we show that the adverse effects of corruption are more salient in industries with smaller average firm size.