The RAS Approach in Updating Input–Output Matrices: An Instrumental Variable Interpretation and Analysis of Structural Change

The main purposes of the paper are to reconsider the rationale of the RAS method, and to attempt to improve on its interpretation and usefulness. The substitution and fabrication factors in the RAS method are interpreted as statistical estimates obtained by the method of instrumental variables. This enables the computation of asymptotic standard errors for the factors and the relative precision of the predicted technical coefficients. Furthermore, an adjustment cost minimization model to describe how a sector determines its substitution and fabrication factors is presented. The solutions of the model provide another rationale for the RAS method, and the associated Lagrangian multipliers can be useful for assessing structural constraints and structural change.     

Strategic Interests of ASEAN-5 in Regional Trading Arrangements in the Asia-Pacific

We examine the strategic interests of ASEAN countries within APEC when forming regional trading arrangements in the pursuit of trade liberalization. Employing a Computable General Equilibrium (CGE) model, the effects of ASEAN's various Free Trade Area arrangements with the U.S., Northeast Asia as well as APEC are analyzed. The impact on ASEAN as a whole as well as for each individual member coutry is examined. A free trade area with the U.S. is likely to benefit the Philippines and Indonesia most.     

Differential total factor productivity in the Four Dragons: the Singapore case

This paper introduces a concept of a latent resource to explain the seemingly low total factor productivity estimated for Singapore. It found that total factor productivity growth in the economy is not as dismal as estimated in other studies if the factor shares used in the computation are nearer to those of developed industrialized economies. The existence of a latent resource also explains the discrepancy in factor shares reported in published information as compared to the empirically derived figures. From this, the policy implication is that measures to maintain the latent resource become important for the Singapore economy to remain internationally competitive.