Studies in East Asian Economies : Capital Flows, Exchange Rates and Monetary Policy.
Material type: TextPublisher: Singapore : World Scientific Publishing Co Pte Ltd, 2011Copyright date: ©2011Description: 1 online resource (284 pages)Content type: text Media type: computer Carrier type: online resourceISBN: 9789814338950Subject(s): Asia -- Economic conditions | Capital movements -- Southeast Asia | Foreign exchange rates -- Southeast Asia | Monetary policy -- Southeast Asia | Southeast Asia -- Economic conditionsGenre/Form: Electronic books.Additional physical formats: Print version:: Studies in East Asian Economies : Capital Flows, Exchange Rates and Monetary PolicyDDC classification: 332 LOC classification: HG3891 -- .H36 2011ebOnline resources: Click to ViewIntro -- Contents -- Preface -- Acknowledgments -- About the Author -- Chapter 1: Introduction -- 1.1. Chapters 2 to 4 -- Chapter 2 -- Chapter 3 -- Chapter 4 -- Structure of the Four ASEAN Economies -- 1.2. Chapter 5 -- 1.3. Chapter 6 -- Chapter 2: Capital Inflows and Growth: Evidence from Pre-Crises ASEAN Economies Shibeshi Ghebre Kahsay and Jagdish Handa -- 2.1. Brief Review of the Relevant Literature -- 2.2. Analytical Framework -- The Link Between Capital Inflows, Public Infrastructure and Economic Growth -- 2.3. Empirical Analysis -- Data and Data Sources -- 2.4. Econometric Analysis for Indonesia -- Stationarity Tests for Indonesia -- Further Analysis of the Indonesian Data -- Assessing Interactions Among Variables -- Summary of the Empirical Findings on Indonesia -- 2.5. Empirical Analyses for Malaysia, Philippines and Thailand -- Background Information on Malaysia, Philippines and Thailand for the I(1) Case -- Stationarity Tests and the Order of Integration -- Cointegration Analysis -- Cointegrating Equations -- Dynamic Adjustment Analysis -- Pooled Regressions -- 2.6. Summary and Conclusions -- Appendix -- References -- Chapter 3: Capital Flows and Real Exchange Rate Behavior: Evidence from Pre-Crises ASEAN Economies Shibeshi Ghebre Kahsay and Jagdish Handa -- 3.1. Background: An Overview of the ASEAN-4 Countries -- 3.1.1. Indonesia -- Exchange Rate Arrangements -- Trade and Investment -- 3.1.2. Malaysia -- Exchange Rate Arrangement -- Trade and Investment -- 3.1.3. Philippines -- Exchange Rate Arrangements -- Trade and Investment -- 3.1.4. Thailand -- Exchange Rate Arrangements -- Trade and Investment -- 3.2. Real Exchange Rates: Theoretical Definitions and Empirical Measurement -- The External Real Exchange Rate -- The Internal Real Exchange Rate -- 3.3. A Two-Good Model of the Internal Real Exchange Rate.
Production and Supply of Commodities -- Demand for Commodities -- 3.4. Terms of Trade and the Internal Real Exchange Rate -- 3.5. Export and Import Real Exchange Rates -- 3.6. Capital Flows and the Real Exchange Rate -- 3.6.1. Review of the Theoretical Literature -- 3.6.2. Review of the Empirical Literature -- 3.7. An Empirical Model of Capital Flows and the Real Exchange Rate -- 3.7.1. The Analytical Framework -- Derivation of Estimating Equations -- The Use of Two Real Exchange Rates -- 3.8. Data, Estimation and Results -- Determining the Order of Integration -- Determining the Cointegrating Rank -- 3.8.1. Alternative Estimators -- 3.8.2. Cointegrating Regressions -- 3.8.3. Error-Correction Models -- 3.8.4. Long-Run Parameters -- 3.9. Summary and Conclusions -- Appendix 3.1 Derivation of the Relationship among the Internal Real Exchange Rate, Capital Inflows, Productivity and the Terms of Trade -- Appendix 3.2 Derivation of Estimating Equations for the Internal Export and Import Real Exchange Rates -- Appendix 3.3 Error-Correction Transformation of the Autoregressive Distributive Lag Model -- Appendix 3.4 Weak Exogeneity -- Appendix 3.5 Data Description and Variable Definition -- Appendix 3.6 Long-Run and Adjustment Coefficients -- References -- Chapter 4: Capital Flows and Monetary Policy: Evidence from Pre-Crises ASEAN Economies Shibeshi Ghebre Kahsay and Jagdish Handa -- 4.1. Overview of the Financial Aspects of the Four ASEAN Economies -- Indonesia -- Malaysia -- The Philippines -- Thailand -- 4.2. Fixed Exchange Rates, Monetary Policy and Capital Mobility -- Monetary Policy and Capital Mobility -- 4.3. Empirical Models of the Capital Flow Offset and Sterilization -- The Monetary Approach to the Balance of Payments -- The Portfolio Balance Approach -- 4.4. Determining the Effectiveness of Sterilization in Changing Domestic Monetary Conditions.
4.5. Data, Estimation and Results -- Offset and Sterilization Coefficients -- Indonesia -- Malaysia -- The Philippines -- Thailand -- 4.6. Assessing the Effectiveness of Sterilization Policy -- 4.7. Summary and Conclusions -- Appendix Definitions of the Variables, and Data Sources -- References -- Chapter 5: Assessing International Capital Mobility: Evidence from China Jagdish Handa, Jie Lin and Helei Wang -- 5.1. The Saving-Investment Correlation Approach to Measuring Capital Mobility -- 5.2. Theoretical Analysis of the Saving-Investment Correlation -- 5.3. Empirical Methodology of the Saving-Investment Correlation Approach -- 5.4. Empirical Estimation and Results on Correlations between I and S -- Unit Root Tests -- ADF Test, Without Structural Breaks -- ZA Approach - Unit Root Test for One Structural Break -- LP Approach - Unit Root Test for Two Structural Breaks -- Bounds Testing Cointegration Approach -- Data Used in this Chapter -- Unit Root Tests -- Breakpoints and Bounds Cointegration Test -- Long-run and Short-run Elasticities -- 5.5. The Intertemporal Consumption-Smoothing Approach to Capital Mobility -- 5.6. The Consumption-Smoothing Model -- 5.7. Econometric Methodology of the Consumption- Smoothing Model -- 5.8. Empirical Estimation of the Consumption- Smoothing Model -- Data -- Unit Root Tests -- Bounds Cointegration Test and Estimation of θ -- VAR Regressions and Comparisons -- Granger-Causality and Wald Tests of the CA Model -- 5.9. Summary and Conclusions -- References -- Chapter 6: Optimal Monetary Policy Instruments and Rules: Evidence from China Shen Guo, Shengzu Wang and Jagdish Handa -- 6.1. The Pursuit of Monetary Policy by the People's Bank of China -- 6.2. Model Description, Loss Functions and Policy Rules -- A Compact Stochastic Macroeconomic Model -- Loss Functions and Policy Rules -- Stochastic Simulation Procedures.
6.3. Estimation and Simulation Results -- Estimation of the Macroeconomic Model -- The Historical Experience on Volatilities -- The Evaluation of the General Monetary Policy Rule -- Specific Reaction Function I: Ignoring the Exchange Rate -- Specific Reaction Function II: A Taylor-Type Rule -- 6.4. Estimation Results when the Loss Function is Augmented to Include Aversion to the Volatility of the Money Supply -- 6.5. Estimation Results when the Loss Function is Augmented to Include Aversion to the Volatility of the Money Supply and the Exchange Rate -- 6.6. Comparison of Optimal Policies with Actual Ones -- 6.7. Summary and Conclusions -- Appendix Data Description -- References -- Chapter 7: Summary and Conclusions -- References -- Index.
Key Features:Using Indonesia, Malaysia, Philippines and Thailand for case studies, this book provides a rare in-depth study on the impact of capital inflows and their impact on exchange rates, monetary policy and growth for small open economies, in the transition from a less developed stage to a more developed one. Using China as a case study, this book also provides a rare insight into the extent of capital flows and the formulation of monetary policy for a large, less developed economy in its transition to becoming a developed economy. There are almost no competing studies employing rigorous econometric techniques on these topics for developing economies.
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