Policy Analyses
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Policy Analyses
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Real Interest Rate Linkages in the Asian-Pacific Region: A Time-Varying Parameter Approach
This paper examines the degree of real interest rate linkages between ten Asian-Pacific economies and two financial markets, Japan and the United States, using quarterly series of short-term interest rates from 1981 to 2003. The ..
Kiyotaka Sato Date 2004.12.25
Financial integrationDownloadContentSummaryThis paper examines the degree of real interest rate linkages between ten Asian-Pacific economies and two financial markets, Japan and the United States, using quarterly series of short-term interest rates from 1981 to 2003. The degree of linkages is evaluated on the basis of the empirical validity of real interest rate parity (RIP). Notably, this paper conducts a time-varying parameter estimation of the ex ante RIP with forecasted inflation rates to explore how real interest rate linkages have evolved over time. It also analyzes the relative importance of US and Japanese real interest rates in determining the rates of the Asian-Pacific economies. Whereas numerous studies have found closer linkages and, hence, growing integration between the Asian-Pacific economies and Japan, this paper finds that the linkages with Japan have gradually declined from around 1990 or before in Singapore, Taiwan and Hong Kong. Our results will yield significant implications for a possible regional monetary union, as financial integration is viewed as one of the preconditions for an optimum currency area. -
The Spoke Trap: Hub-and-Spoke Bilateralism in East Asia
A Japan-Korea Free Trade Agreement (FTA) is very likely to trigger a domino effect that induces other East Asian nations to aggressively pursue FTAs. The resulting liberalisation is likely to be good for the region, but there is a..
Richard E. Baldwin Date 2004.12.25
Economic cooperationDownloadContentSummaryA Japan-Korea Free Trade Agreement (FTA) is very likely to trigger a domino effect that induces other East Asian nations to aggressively pursue FTAs. The resulting liberalisation is likely to be good for the region, but there is a danger. The political economy force that drives the domino effect tends to produce hub-and-spoke bilateralism-an arrangement that is economic inefficient and potentially divisive since Japan and China are the two natural hubs. This paper begins with a summary of the negative effects of hub-and-spoke bilateralism and a discussion of the political economy forces that drive it. (The rest is omitted.) -
Regional Integration in Northeast Asia: Approaches to Integration Among China, Korea and Japan
Since the nineteenth century, there have been conflicts among China, Korea, and Japan as in European countries. Despite the history of conflicts, European countries have already reached a common community, while these three countr..
Jeong-Pyo Hong Date 2004.12.25
Economic integration, Economic cooperationDownloadContentSummarySince the nineteenth century, there have been conflicts among China, Korea, and Japan as in European countries. Despite the history of conflicts, European countries have already reached a common community, while these three countries in Northeast Asia hesitate to build an economically integrated system. Before and behind the Asian financial crisis in 1997, there have been some attempts of economic cooperation in East Asia. Nevertheless political integration in Northeast Asia remains stagnant because these countries have hostile historical background with each other, and have uncertain sovereignty. Even though there is still anti-Japanese sentiment in Korea and China, cultural exchange continues to increase between these countries and Japan. The new generation leaders in China and Japan will lead the regional integration in this area. -
Economic and Political Interaction across the Taiwan Strait Facing the Trend of Economic Integration in East Asia
Regional economic integration has been an important issue for decades in Europe and North America. However, this has been less the case in East Asia due to the complexity and diversity of politics, diplomacy, culture, and economic..
Lee-in Chen Chiu Date 2004.12.25
Economic integrationDownloadContentSummaryRegional economic integration has been an important issue for decades in Europe and North America. However, this has been less the case in East Asia due to the complexity and diversity of politics, diplomacy, culture, and economics. (The rest is omitted.) -
An Output Perspective on a Northeast Asia Currency Union
The prospect of creating a currency union consisting of China, Japan, and Korea is evaluated using output data. After a brief discussion on the interactions between the three countries, the study investigates whether these three c..
Yin-Wong Cheung Date 2004.12.25
Exchange rateDownloadContentSummaryThe prospect of creating a currency union consisting of China, Japan, and Korea is evaluated using output data. After a brief discussion on the interactions between the three countries, the study investigates whether these three countries have common synchronous business cycles, which are perceived as one of the preconditions of a currency union. Then, we assess the potential costs of giving up monetary policy autonomy to form a currency union. It is found that the three national output series tend to move together in the long run and share common business cycles. While the output loss estimates depend on assumptions used to generate shocks, they tend to be small. However, there are potential conflicts between these countries on the choice of the policy target of the common monetary authorities. -
An Analysis of Economic Efficiency in the European Economy in the light of its Macroeconomic Performances
Examining the causes and consequences of the European capitalist society would be helpful in understanding the past poor performance of the European economy. Especially, we investigate the macroeconomic performances of Europe and ..
Sangyong Joo et al. Date 2004.12.25
DownloadContentExecutive Summary
I. Introduction
II. economic growth and unemployment in Europe
1. economic growth
2. unemployment
III. economic institution in Europe: labor, finance and market regulation
1. flexiblity in labor market: regulation and institution related to labor
2. financial development and financial structure
3. market regulation
IV. relationship between economic structure and growth
V. productivity
1. trend
2. cause of productivity gap
VI. other characteristics of the European economy
VII. conclusion and implications결론 및 시사점
referencesSummaryExamining the causes and consequences of the European capitalist society would be helpful in understanding the past poor performance of the European economy. Especially, we investigate the macroeconomic performances of Europe and itsfuture prospects. (The rest is omitted.) -
Economic Effects of the WTO Sectorial Tariff Elimination Negotiations on the Korean Economy and Korea's Negotiation Strategies
In the 'July Decision' WTO members took decisions on the following key issues to ensure continued progress in the non-agricultural market access (NAMA) negotiations: (i) tariff reduction modality and (ii) sectorial tariff eliminat..
Nakgyoon Choi Date 2004.12.25
Trade policyDownloadContentSummaryIn the 'July Decision' WTO members took decisions on the following key issues to ensure continued progress in the non-agricultural market access (NAMA) negotiations: (i) tariff reduction modality and (ii) sectorial tariff elimination. Specifically, WTO members recognized that a sectorial component is an integral element to achieving the NAMA negotiation objectives. In 2005, the NAMA Negotiating Group will be expected to pursue discussions on such component with a view to defining product coverage and participation.
Currently, the four documents regarding sectorial tariff elimination, including the draft proposal by the chairperson of NAMA Negotiating Group and three official proposals by the US, Japan, and Canada, were circulated to the NAMA delegations. Further proposal submissions will be expected before the Hong Kong Ministerial Conference that is to be held in December of 2005.
This study analyzes the economic effects of the sectorial tariff elimination negotiations on Korean industries based on two industry coverages: (i) all Korean manufacturing sectors and (ii) 31 sectors suggested by the above-mentioned four documents.
In order to capture the macroeconomic as well as industry-specific effects, this study employs the following methodologies: First, it investigates the international tariff and trade structures, calculating the trade specialization index to measure Korean industrial competitiveness. Second, it applies the Computable General Equilibrium (CGE) methodology using the GTAP database to analyze the macroeconomic effects. Third, it studies the impacts of the tariff elimination on the export and import values based on the elasticity analysis approach. Fourth, it investigates the industrial forward as well as backward linkage effects using the 2000 Korean Input-Output Table. Fifth, the field survey reveals the qualitative aspects of the firm-level evaluations on tariff elimination.
The statistical analysis and field survey provide the following three industry categories according to the Korean industries' positions to the tariff elimination negotiations. The first category is the sectors that need to actively participate in the tariff elimination negotiations because they have competitive advantage in the global market. This group of Korean sectors will have to participate in the negotiations even in cases where a part of the WTO members will be involved. The second category is the sectors that need to conditionally participate in the negotiation. Namely, such group of Korean industries is advised to participate in the negotiations only if more than 80 to 90 percent of the WTO members will be involved. On top of this, the longer period of tariff elimination need to be allowed to this category. The third category is the sectors that would better reject the participation because the negative impacts due to the shrinking market share are expected.
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Country-Specific Factors and the Pattern of Intra-Industry Trade in China's Manufacturing
Over the past few decades there have been extensive empirical and theoretical studies of the determination of intra-industry trade (IIT), but mostly for the industrialized countries. This paper aims to assess the trends and patter..
Zhaoyong ZHANG Date 2004.12.25
Trade structureDownloadContentI. Introduction
II. The Theoretical Framework
III. Data
IV. The Results
1. The Distribution of IIT
2. The Estimation Results
V. Conclusions
References
AppendixSummaryOver the past few decades there have been extensive empirical and theoretical studies of the determination of intra-industry trade (IIT), but mostly for the industrialized countries. This paper aims to assess the trends and pattern of intra-industry trade and structural adjustment in China's manufacturing associated with its trade liberalization using data spanning from 1989 to 2001. (The rest is omitted.) -
Enhancing Investment Cooperation in Northeast Asia
Although Northeast Asia constitutes one of the core economic regions of the world, it has lagged far behind other major regions such as The EU and North America in terms of economic integration.foreign direct investment (FDI) flow..
Edited by Joon-Kyung Kim et al. Date 2004.12.20
Economic cooperationDownloadContentSummaryAlthough Northeast Asia constitutes one of the core economic regions of the world, it has lagged far behind other major regions such as The EU and North America in terms of economic integration.foreign direct investment (FDI) flows in Northeast Asia as a whole and intraregional FDI still remain relatively low, and in particular, few development projects in the northern parts of Northeast Asia have been materialized. Notwithstanding this fact, there has not yet been any regional talk, at least at the central governmental level, to expand intraregional FDI flows among the Northeast Asian countries. The papers in this volume, the product of a project jointly organized by the Korea Institute for International Economic Policy and the Northeast Asia Economic Forum, attempt to shed new light on the role of intraregional FDI in NEA in promoting economic integration, and to explore the appropriate institutional arrangements that would be best suited for achieving investment cooperation in the NEA region. -
An Analysis on Trade Patterns with Chile after the Korea-Chile FTA
For five months since the implementation of the Korea-Chile FTA, import has recorded $800 million with 89.9% of increase, while export increased by 37.9% recording $290 million. The following trade deficit has amounted up to $510 ..
Jun Gu Kang et al. Date 2004.12.20
Free tradeDownloadContentSummaryFor five months since the implementation of the Korea-Chile FTA, import has recorded $800 million with 89.9% of increase, while export increased by 37.9% recording $290 million. The following trade deficit has amounted up to $510 million, which was a great increase of 140.8% compared with last year. This brought about many doubts about the FTA with Chile. (The rest is omitted.)