Most recent papers:

• Banking System Reform in China: The Challenges to Improving Its Efficiency in Serving the Real Economy.
  Kumiko Okazaki.
  Asian Economic Policy Review. July 05, 2017
  The Chinese banking system reform since the country's accession to the World Trade Organization has yielded remarkable success. The major listed commercial banks have improved their operational performance significantly. However, there are some signs of changes in their financial results recently. The expanding debt of non‐profitable enterprises and local governments raises a question on the achievements of the previous reform. Considering that the competition among banks will become severer with financial liberalization under slower economic growth, the banks and supervisory authorities must continue to make greater efforts towards further reform in order to improve the banks' corporate governance and the risk management system.

  July 05, 2017   doi: 10.1111/aepr.12188   open full text
• The Current Wave of State Enterprise Reform in China: A Preliminary Appraisal.
  Barry Naughton.
  Asian Economic Policy Review. July 05, 2017
  State enterprise reforms are underway in China, and include some positive and overdue corporate governance reform. However, the potential effectiveness of the reforms is compromised by the attempt of policy‐makers to achieve three goals which form an “impossible trinity”: increase firm autonomy; improve oversight; and assign new developmental missions to state firms. The goal of assigning new developmental missions to state firms is reflected in the design of new state investment companies which are intended to gradually take over ownership functions from existing agencies. The structure and function of the new ownership agencies undermines the potential of the corporate governance reforms at the enterprise level. These contradictions will be costly because state firms will likely be ineffective in carrying out developmental missions—particularly technology innovation—while also failing in the enterprise reform goal of becoming more efficient and profitable.

  July 05, 2017   doi: 10.1111/aepr.12185   open full text
• China's New Role in the International Financial Architecture.
  Peter Drysdale, Adam Triggs, Jiao Wang.
  Asian Economic Policy Review. July 05, 2017
  The rise of China is challenging the international financial architecture in a number of ways. This paper highlights three that are of critical importance: the challenge of absorbing massive Chinese savings; the incorporation of China into a cohesive global financial safety net; and the organisation of China's participation in funding the demand for international investment projects. The global financial architecture needs to be reformed. But what role should China play? The paper defines the options open to China and the opportunities and barriers it will face. We argue that China can work with the established economic powers in reforming the existing architecture. At the same time, China seeks cooperation in building new institutions and organisations that fill gaps in the existing arrangements. But no matter how international financial diplomacy plays out in the near term, deep financial and economic reform at home will alone deliver China a central role in the international financial architecture. Domestic reform could also attend to some of the challenges that currently plague China's impact on the system. The success or failure of these domestic reforms will be at the crux of the strength or fragility of the international financial architecture in the years ahead.

  July 05, 2017   doi: 10.1111/aepr.12182   open full text
• The Boom and Bust of the RMB's Internationalization: A Perspective from Cross‐Border Arbitrage.
  Ming Zhang, Bin Zhang.
  Asian Economic Policy Review. July 05, 2017
  The RMB's internationalization developed very quickly from 2010 to 2015H1, but it slowed down significantly since 2015H2. This paper argues that cross‐border arbitraging activities played a significant role in both the boom and the bust of the RMB's internationalization. A slower pace of the RMB's internationalization based more on real demand might become a new norm in the future. To pursue a more sustainable RMB internationalization in the next decade, the Chinese government should maintain a relatively high economic growth rate, avoid the burst of systemic financial crisis, continue to liberalize the capital account in a gradual and cautious way, accelerate the reform and opening up of the domestic financial market, and integrate the RMB's internationalization with Asian monetary cooperation.

  July 05, 2017   doi: 10.1111/aepr.12179   open full text
• Local Government Debt and Firm Leverage: Evidence from China.
  Yousha Liang, Kang Shi, Lisheng Wang, Juanyi Xu.
  Asian Economic Policy Review. July 05, 2017
  China's local government debt financing has been expanded aggressively to support infrastructure investment, especially since the enactment of four‐trillion‐yuan stimulus plan to stimulate the economy post global financial crisis. At the same time, the rapid increase of firm‐level leverage ratio of state‐owned enterprises (SOEs) and the decline of leverage ratio of non‐SOEs jointly deteriorated China's credit misallocation problem. In this study, we empirically test the effect of local government debton firm leverage in China. We find that an expansion of local government debt significantly crowded out the leverage of non‐SOEs, while crowded in that of SOEs. Moreover, the effect differed across industries and sectors.

  July 05, 2017   doi: 10.1111/aepr.12176   open full text
• Building an Efficient Financial System in China: A Need for Stronger Market Discipline.
  Yiping Huang, Xu Wang.
  Asian Economic Policy Review. July 05, 2017
  China has built a very comprehensive financial system, but has not let the market mechanism work freely. This unique pattern, rooted in China's dual‐track reform strategy between state and non‐state sectors, did not prevent a strong economic performance in the past, but is now a main cause of economic inefficiency and financial risks. The rapid development of digital finance is a back‐door way of financial liberalization, responding to both old repressive policies and new technologies. To accomplish the mission of building an efficient financial system, the government needs to take at least three further steps in financial reform: creating a level‐playing field; freeing up the market mechanism; and improving regulation. The key test lies in the effective enforcement of market discipline for corporate and financial institutions.

  July 05, 2017   doi: 10.1111/aepr.12173   open full text
• Returns to Education and Skills in the Labor Market: Evidence from Japan and Korea.
  Jong‐Wha Lee, Dainn Wie.
  Asian Economic Policy Review. January 11, 2017
  This study investigates the determinants of skill proficiency, and the impact of adult skills on earnings, in Japan and Korea. Using the Program for the International Assessment of Adult Competencies survey data, it shows that Japanese adults perform better than Korean respondents, on average, on skill proficiency tests. A decomposition analysis shows that the score gap in literacy, numeracy, and problem solving skills between the two countries is mostly due to different returns to individual characteristics such as upper‐secondary and tertiary education. Adult skills have a positive and significant impact on individual earnings and employment probability, in both countries. In Japan, the returns to literacy, numeracy, and problem‐solving skills increase significantly with experience, and tend to fall with formal education, suggesting employer learning or human capital accumulation through career progression. In contrast, in Korea, the returns to literacy and numeracy skills do not seem to increase with experience.

  January 11, 2017   doi: 10.1111/aepr.12169   open full text
• The Effect of Parental Absence on Child Development in Rural China.
  Jia Wu, Junsen Zhang.
  Asian Economic Policy Review. January 11, 2017
  This study estimates the effect of parental absence on the development of children in rural China. Although some previous studies have looked into the effect of parental absence on children's academic achievements, we investigate the effects of parental absence on both the cognitive and non‐cognitive skills of children. Our results show that parental absence during early child development mostly incurs negative effects on the academic achievement and non‐cognitive development of children. A child whose parents are both absent tends to have lower Chinese and mathematics test scores, lower self‐assessment on his/her behavior, and is less likely to be happy and satisfied. A gender difference is also observed in the effect of parental absence: girls suffer more from the effect of both parents being absent on their mathematics test scores than do boys.

  January 11, 2017   doi: 10.1111/aepr.12166   open full text
• Availability of Long‐term Care Facilities and Middle‐aged People's Labor Supply in Japan.
  Ayako Kondo.
  Asian Economic Policy Review. January 11, 2017
  This paper estimates the effect of the availability of long‐term care facilities in the prefecture or medical district where middle‐aged men and women reside on their labor supply. Prefecture‐ and medical district‐ level panel datasets of the capacity of long‐term care facilities are merged with individual level employment data, and each individual's employment status is regressed on the capacities of long‐term care facilities. I find no evidence for a positive impact of the long‐term care availability on labor supply, although the estimates are unstable in sign and not estimated precisely enough to draw any strong conclusions.

  January 11, 2017   doi: 10.1111/aepr.12163   open full text
• Labor Regulations, Employment and Wages: Evidence from India's Apparel Sector.
  Rana Hasan, Nidhi Kapoor, Aashish Mehta, Asha Sundaram.
  Asian Economic Policy Review. January 11, 2017
  While India is among the world's largest producers and exporters of apparel products, the sector has not performed to its potential. This study analyzes why this might be so from the perspective of the structure of production in the sector, the most striking aspect of which is a firm size distribution heavily dominated by small firms. Using nationally representative firm‐level and labor force survey data, we argue that the dominance of firms operating at scales too small to apply modern production and management technologies is one proximate reason for India's relative underperformance. Further, we note that India's labor regulations and the associated enforcement regime are important policy drivers of Indian firms' tendency to avoid placing “too many workers under one roof”.

  January 11, 2017   doi: 10.1111/aepr.12160   open full text
• The Labor Contract Law, Macro Conditions, Self‐Selection, and Labor Market Outcomes for Migrants in China.
  Xin Meng.
  Asian Economic Policy Review. January 11, 2017
  China introduced a new Labor Contract Law (LCL, 2008) to protect employees’ working conditions and welfare. Early evaluations of labour market outcomes suggest positive effects for workers. In the same period, however, China faced labor market tightening, which facilitated the LCL's introduction and enforcement. Existing evaluations of the LCL treat the introduction of the LCL as being exogenous. We show that labor market tightening and individuals’ self‐selection into jobs whichcomply with the Law have affected migrant labor market outcomes. Taking these factors separately into account suggests that, the LCL has had varying effects on labor market outcomes: a negative effect on wages and hours; an unclear effect on having a written contract, and a positive effect on social insurance participation. Data inadequacies prevent us from considering these factors simultaneously.

  January 11, 2017   doi: 10.1111/aepr.12157   open full text
• Disasters, Household Decisions, and Insurance Mechanisms: A Review of Evidence and a Case Study from a Developing Country in Asia.
  Yasuyuki Sawada.
  Asian Economic Policy Review. January 11, 2017
  This article investigates whether and how Asian people's exposure to a variety of disasters undermine their decisions and welfare. Our case study from Vietnam, based on household panel data, shows that households adopt a variety of coping strategies against the damages caused by disasters especially through credit and labor markets. While the consumption risk sharing networks function effectively at the commune level, market and non‐market insurance mechanisms are not sufficient, especially at the regional, national, and international levels. Hence, it is imperative to strengthen market, government, and community based insurance mechanisms to diversify aggregate disaster risks at the individual, national, and regional levels in Asia.

  January 11, 2017   doi: 10.1111/aepr.12154   open full text
• Economic Impacts of Improved Connectivity for ASEAN: An Application of the Geographical Simulation Model.
  Ikumo Isono, Satoru Kumagai.
  Asian Economic Policy Review. July 04, 2016
  We compare the prioritized projects of the Master Plan on ASEAN Connectivity (MPAC) and the Comprehensive Asia Development Plan (CADP) by utilizing the Institute of Developing Economies/Economic Research Institute for ASEAN and East Asia Geographical Simulation Model. The prioritized projects of the MPAC mainly focus on specific hard or soft infrastructure projects connecting one remote area of an ASEAN member state to another and thus fail to capture the full potential of the infrastructure because of neglected important links within a state. On the other hand, the CADP emphasizes the importance of economic corridors or linkages between a large cluster and another cluster. Our simulation analysis shows that CADP projects will result in an addition to gross domestic product (GDP) of $US 1544bn over the period from 2021 to 2030 (in 2010 dollars) or an impact on ASEAN countries that is 12 times larger than MPAC projects. The results strongly suggest that the CADP projects should be adopted and implemented to fully realize the potential economic growth of the ASEAN countries. Moreover, the CADP will contribute more to narrowing the development gaps among the ASEAN countries than MPAC prioritized projects.

  July 04, 2016   doi: 10.1111/aepr.12147   open full text
• Infrastructure and Connectivity in India: Getting the Basics Right.
  Purva Singh, Rajat Kathuria.
  Asian Economic Policy Review. July 04, 2016
  Infrastructure helps in building productive capacity by bridging connectivity gaps, reducing distribution and trade costs, and facilitating the sharing of the benefits of growth with poorer groups and communities, among others. The evidence in this paper suggests the need for India to develop both hard as well as soft infrastructure for enhancing trade flows and growth. The existence of both aspects simultaneously will produce gains of a significantly higher order but one without the other is likely to be ineffective.

  July 04, 2016   doi: 10.1111/aepr.12144   open full text
• Philippine Infrastructure and Connectivity: Challenges and Reforms.
  Gilberto M. Llanto.
  Asian Economic Policy Review. July 04, 2016
  The Philippines has performed creditably well in the past few years. Ensuring better infrastructure and connectivity is crucial in attaining inclusive growth. This will require substantial investments in infrastructure. Various reforms to address the infrastructure lack were implemented but there is scope for more reforms: improving fiscal space, reforming budgetary processes, improving public‐private partnerships (PPPs) and the regulatory environment, and better policy coordination to address problems of connectivity and infrastructure. The Philippines has to continuously improve the governance framework, ensure stability and predictability of policies and regulations. Better coordination among a diverse set of governmental infrastructure bodies, and also between government and the private sector is needed to address infrastructure bottlenecks.

  July 04, 2016   doi: 10.1111/aepr.12141   open full text
• Improving Connectivity in Indonesia: The Challenges of Better Infrastructure, Better Regulations, and Better Coordination.
  Henry Sandee.
  Asian Economic Policy Review. July 04, 2016
  This paper presents and discusses the main challenges that an archipelago like Indonesia is facing in improving its connectivity. Distinguishing between intra‐island, inter‐island, and international connectivity is essential in order to understand the nature of the challenges and causes behind the bottlenecks. High domestic shipping costs are identified as one key challenge. The Government of Indonesia has identified improved connectivity as a key issue in promoting economic growth, especially in the manufacturing sector, now that Indonesia can no longer rely on commodities as a driver of growth. Better infrastructure, regulations, and coordination among stakeholders are crucial components in promoting improved connectivity for manufacturing growth. Promoting investment in infrastructure is necessary, including both hard and soft infrastructure. However, Indonesian experience highlights that without regulatory reform and improved policy coordination, infrastructure investment will continue to lag behind. There is a need for an improved and empowered governance structure to turn investment plans into reality.

  July 04, 2016   doi: 10.1111/aepr.12138   open full text
• China's Transport Infrastructure Investment: Past, Present, and Future.
  Yu Qin.
  Asian Economic Policy Review. July 04, 2016
  China has been heavily investing in transportation infrastructure since the 1990s. Consequently, connectivity has been significantly improved, both within China and between China and other countries. Such large‐scale investments have been made possible by various financing mechanisms from the central government, local governments, and the private sector. Research findings generally indicate that these infrastructure investments bring economic prosperity to the country, affect the distribution of economic activities, reduce poverty to a certain extent, and promote economic integration. The future trends of connectivity changes in China and relevant policy recommendations are also discussed in this paper.

  July 04, 2016   doi: 10.1111/aepr.12135   open full text
• Connectivity in East Asia.
  Douglas H. Brooks.
  Asian Economic Policy Review. July 04, 2016
  As Asian economies have become more connected through physical and institutional infrastructure, the region's trade has grown and changed. Intraregional trade has increased its share, in large part through the expansion of trade in intermediates in connection with development of global value chains. At the same time, as part of the same process and as part of the structural transformation that underlies most economic development, the share of services in Asia's trade has risen. Policies that support the development of regional infrastructure and the flow of goods and services, as well as factors of production, can increase the benefits from connectivity. Meanwhile, regional cooperation has a key role to play in mitigating negative impacts that may arise from the vulnerabilities that accompany greater connectivity.

  July 04, 2016   doi: 10.1111/aepr.12132   open full text
• Role of Sport in International Relations: National Rebirth and Renewal.
  Victor Cha.
  Asian Economic Policy Review. January 04, 2016
  The modern history of sports is inextricably intertwined with national pride, international prestige, and world politics. In many ways, sport has created spillover effects that go beyond sporting results. First, it has played an important role in nation‐building and as a benchmark of national identity. Second, it has served as a vessel through which nations and people assert political independence and to express a distinctive identity. Third, it acts as a conduit of power, allowing nations such as Australia to augment its global status and position on the world stage. Last, sport constitutes a means of contextualizing the renewal or rebirth of a nation, like the success of the 1964 Tokyo Games for post‐war Japan.

  January 04, 2016   doi: 10.1111/aepr.12127   open full text
• Level the Playing Field to Bolster the Boardroom: Sports as a Springboard for Women's Labor Force Advancement in Asia.
  Barbara Kotschwar, Kevin Stahler.
  Asian Economic Policy Review. January 04, 2016
  We promote women's participation in sports as part of a solution to better integrate women into the labor force of Asian economies. Women in Asia lag other regions in terms of labor force participation and membership in corporate leadership bodies; this is particularly acute in East Asia. Involvement in sport has been found to be associated with long‐term economic benefits for women internationally, including enhanced returns to education and labor outcomes. We propose a number of sports program‐related policies for Asian countries to consider in order to better integrate women into education, society, labor, and corporate boardrooms.

  January 04, 2016   doi: 10.1111/aepr.12124   open full text
• A Business Analysis of Asian Baseball Leagues.
  Hayley Jang, Young Hoon Lee.
  Asian Economic Policy Review. January 04, 2016
  This study reviews previous research on sports economics and applied descriptive analyses to derive policy recommendations for the Korean Baseball Organization and the Nippon Professional Baseball. We discuss various aspects of the contemporary baseball business, and compare them with the American Major League Baseball (MLB). One distinctive characteristic common to both Asian leagues is the governance structure, where member teams are owned by major conglomerates. We explore this characteristic to assess the business objectives of the Korean Baseball Organization and the Nippon Professional Baseball, and find that their sources of competitive balance differ from those in MLB. Our conclusion suggests that their business objective should begin to move slowly toward one similar to that of MLB, and safeguards should be implemented to maintain a reasonable competitive balance. We also conclude that sports diplomacy and the creation of international competition are important because international competition and the success of national teams are critical for fan demand.

  January 04, 2016   doi: 10.1111/aepr.12121   open full text
• Asian Participation and Performance at the Olympic Games.
  Marcus Noland, Kevin Stahler.
  Asian Economic Policy Review. January 04, 2016
  This paper examines Asian exceptionalism at the Olympics. Northeast Asian countries conform to the statistical norm, whereas the rest of Asia lags, but this result obscures underlying distinctions. Asian women do better than men. Non‐Northeast Asia's relative underperformance is due to the men. Asian performance is uneven across events, finding more success in culturally connected and weight‐stratified contests. The models imply that China, Japan, and South Korea will place among the top 10 medaling countries at the 2016 Games, whereas China will continue to close the medal gap with the United States.

  January 04, 2016   doi: 10.1111/aepr.12118   open full text
• The Long‐Term Impacts of the 1998 Nagano Winter Olympic Games on Economic and Labor Market Outcomes.
  Koyo Miyoshi, Masaru Sasaki.
  Asian Economic Policy Review. January 04, 2016
  This paper aims to assess the long‐term effects of the 1998 Nagano Winter Olympic Games on various economic and labor market outcomes in Nagano Prefecture. One‐shot and large‐size events, such as the Olympic Games, are expected to boost the local economy and create jobs, thus leading to lower unemployment. In addition, the tightening of the local labor market eventually raises wages. Using the synthetic control methodology, we build counterfactual dynamics of various economic and labor market outcomes for Nagano Prefecture, and then compare these outcomes with the actual data for these variables. This allows us to determine how the local economic and labor market outcomes in Nagano Prefecture would have been different had the 1998 Olympic Games not been held there.

  January 04, 2016   doi: 10.1111/aepr.12115   open full text
• Professional Asian Football Leagues and the Global Market.
  Stefan Szymanski.
  Asian Economic Policy Review. January 04, 2016
  This paper considers the development potential for professional football (soccer) leagues in Asia. This is set in the context of a global market where playing talent is easily bought and sold, and fans are attracted by the highest quality of play which they mostly consume via screens. The paper highlights the relative underdevelopment of Asian leagues given the size and growing economic power of the Asian markets, and suggests some ways in which this might change in the future.

  January 04, 2016   doi: 10.1111/aepr.12112   open full text
• Product Downsizing and Hidden Price Increases: Evidence from Japan's Deflationary Period.
  Satoshi Imai, Tsutomu Watanabe.
  Asian Economic Policy Review. January 09, 2014
  In this paper, we empirically examine the extent to which product downsizing occurred during the deflationary period in Japan, as well as the effects of product downsizing on prices and quantities sold. Using scanner data on prices and quantities for all products sold at about 200 supermarkets over the last 10 years, we find that about one third of product replacements were accompanied by a size/weight reduction. We also find that a 1‐percentage point larger size/weight reduction is associated with a 0.45‐percentage point larger price decline, resulting in an effective price increase. Finally, we show that the quantities sold decline with product downsizing, and that the responsiveness of the quantity sold to size/weight changes is almost the same as the price elasticity, indicating that consumers are as sensitive to size/weight changes as they are to price changes. Our results suggest that the Japanese consumer price index may be downwardly biased rather than upwardly biased.

  January 09, 2014   doi: 10.1111/aepr.12047   open full text
• Micro Price Dynamics during Japan's Lost Decades.
  Nao Sudo, Kozo Ueda, Kota Watanabe.
  Asian Economic Policy Review. January 09, 2014
  We study micro price dynamics and their macroeconomic implications using daily scanner data from 1988 to 2013. We provide five facts. First, posted prices in Japan are ten times as flexible as those in the US scanner data. Second, regular prices are almost as flexible as those in the USA and Euro area. Third, the heterogeneity of frequency and size of price change across products is sizable and maintained throughout the sample period. Fourth, during Japan's lost decades, temporary sales have played an increasingly important role in households' consumption expenditure. Fifth, the frequency of upward regular price revisions and the frequency of sales are significantly correlated with the macroeconomic environment, in particular indicators associated with a labor market, while other components of price changes are not.

  January 09, 2014   doi: 10.1111/aepr.12044   open full text
• Chronic Deflation in Japan.
  Kenji Nishizaki, Toshitaka Sekine, Yoichi Ueno.
  Asian Economic Policy Review. January 09, 2014
  Japan has suffered from a long‐lasting but mild deflation since the latter half of the 1990s. Estimates of a standard Phillips curve indicate that a decline in inflation expectations, the negative output gap, and other factors such as a decline in import prices and a higher exchange rate all account for some of this development. These factors, in turn, reflect various underlying structural features of the Japanese economy. This paper examines a long list of these structural features that may explain Japan's chronic deflation, including the zero lower bound on the nominal interest rate, public attitudes toward the price level, central bank communication, weaker growth expectations coupled with declining potential growth or the lower natural rate of interest, risk‐averse banking behavior, deregulation, and the rise of emerging economies.

  January 09, 2014   doi: 10.1111/aepr.12041   open full text
• Is Downward Wage Flexibility the Primary Factor of Japan's Prolonged Deflation?
  Sachiko Kuroda, Isamu Yamamoto.
  Asian Economic Policy Review. January 09, 2014
  By using both macro‐ and micro‐level data, this paper investigates how wages and prices evolved during Japan's lost two decades. We find that downward nominal wage rigidity was present in Japan until the late 1990s, but disappeared after 1998 as annual wages became downwardly flexible. Moreover, nominal wage flexibility may have contributed to Japan's relatively low unemployment rates. Although macro‐level movements in nominal wages and prices seemed to be synchronized, such synchronicity is not observed at the industry level. Therefore, wage deflation does not seem to be a primary factor of Japan's prolonged deflation.

  January 09, 2014   doi: 10.1111/aepr.12056   open full text
• A Pass‐Through Revival.
  Etsuro Shioji.
  Asian Economic Policy Review. January 09, 2014
  It has been found that the pass‐through of the exchange rate and import prices to domestic prices has weakened over time. The most recent research, however, shows that this trend may have been reversed. Recent studies have applied various time series methods to the Japanese data, and estimated responses of domestic prices to the exchange rate and import prices in different time periods. Those studies have found signs that pass‐through has made an impressive comeback since the early 2000s. This paper reviews the most recent evidence and discusses its policy implications. I argue that the exchange rate has likely regained its status as an important transmission mechanism of monetary policy to domestic prices.

  January 09, 2014   doi: 10.1111/aepr.12053   open full text
• Who Faces Higher Prices? An Empirical Analysis Based on Japanese Homescan Data.
  Naohito Abe, Kyosuke Shiotani.
  Asian Economic Policy Review. January 09, 2014
  On the basis of household‐level scanner data (called homescan data) for Japan, we construct a household‐level price index and investigate the causes of price differences across households. We observe large price differentials across households, a result that is consistent with the previous research based on the data in the USA. However, the differences across age and income groups are small. In addition, we find that elderly people face higher prices than the younger ones, which is contrary to the results of the previous research. The most important determinant of the price level is the extent to which households rely on bargain sales; doubling purchases of goods at bargain sales decreases the price level by about 2%, while shopping frequency only has a limited effect on the price level.

  January 09, 2014   doi: 10.1111/aepr.12050   open full text