The Singapore Economic Review

We develop a simple model with endogenous rural–urban migration to analyze the implications of migration restrictions for economic welfare. The model reveals that a combination of an efficient urban bias in public service provision and internal migration restrictions can raise social welfare. Our results suggest that migration restrictions should be carefully assessed as a policy choice rather than immediately dismissed as suboptimal. However, even when restrictions raise social welfare, they increase urban households’ welfare at the expense of rural households’ welfare, creating an equity tradeoff for policy-makers to consider.

In this paper, we focus on foreign aid-effectiveness in developing aid-recipient countries. By disaggregating total aid into sub-categories, we develop a model in which aid affects the welfare of the poor, as measured by a human development index. Our estimates (robust for different specifications) show that an increase in aid to the agricultural sector, one of our aid sub-categories, can improve the welfare of the poor, both directly and indirectly, through pro-poor public expenditure. Accordingly, more attention to the agricultural sector and reversing the decline in agricultural aid may improve the overall effectiveness of aid and achieve a sustainable transition out of poverty by increasing aggregate welfare.

This study investigates the impact of stricter environmental regulation on export exit behavior of Chinese manufacturing firms from 1998 to 2009. After controlling heterogeneous firm, we find that (i) on average, the stricter regulation has not significantly caused more export exit; (ii) under stricter policy, foreign invested pure (or pollution intensive) exporters are not more likely to exit export than domestic pure (or pollution intensive) exporters; (iii) only weak evidence supports the pollution haven hypothesis for domestic pure exporters. All our robustness checks such as difference in difference analysis, different regulation measurement, and matched firm analysis show similar results.

The paper empirically examines the nexus between tourism and peace. To do so, it uses in the analysis the recently developed composite Global Peace Index. The sample employed consists of 113 countries and covers the period 2008–2014. The methodology adopted includes PVAR Granger causality tests and impulse response functions. The sample was split into two income groups to allow for the possibility that the nexus differs between developed and developing countries. Findings reported herein indicate a temporary, very short-term adverse effect on tourism as a result of worsening levels of peacefulness only for the former group of countries. A peace promoting effect by tourism is established in the case of the latter group.

By employing the factor augmented vector autoregression (FAVAR) model, this paper compares the role of macroeconomic and sector-specific factors in price movements for China and India, taking into account the features unique to developing economies. We find that fluctuations in the aggregated prices in China are more persistent than the underlying disaggregated prices. Compared to China, prices in India respond more promptly to macroeconomic and monetary policy shocks. We also show that the urban CPI in China responds more sharply than rural CPI when facing sector-specific shocks, while the opposite is valid for India.

This paper investigates the link between stock market liquidity and firm value in an important emerging market, Vietnam. Specially, we examine this relationship using a sample of firms listed on the Ho Chi Minh City stock exchange for the period 2006–2014. We show that there is a negative relation between liquidity and firm value. This outcome is contrary to previous results for many developed countries. Further, we demonstrate that this result may be explained by differences in leverage effects and pricing-based theories, where stock liquidity influences firm performance via an illiquidity premium or mispricing.

This study explores a foreign bias model to examine if the degree of foreign bias of sovereign wealth fund depends on the spatial spillover effects of cultural distances. Using the spatial panel data of foreign investment by sovereign wealth fund in 2008–2014, we empirically test (1) whether the relationships between return, risk and foreign bias of sovereign wealth fund are statistically significant and (2) whether this relationship depends on the spatial spillover effects of cultural distances. The evidence strongly supports our hypotheses across six target countries (Australia, Canada, China, Germany, the United Kingdom and the United States).

We propose a new determinant of mutual fund performance persistence. We argue that different funds have different abilities to generate persistent performance and that such heterogeneity across funds can be explained by fund manager access to market information. To justify this hypothesis, we construct a network of mutual funds based on the commonality of their stock holdings and use network features to characterize how well a fund acquires and utilizes market information. Based on a sample of U.S. equity funds from 2001 to 2014, we find that a mutual fund with more complete information is more likely to possess momentum in performance.

We use a monthly dataset to analyze whether Islamic banks have greater market power compared with their conventional counterparts. Using a sample of Indonesian banks, we find that Islamic banks possess greater market power than conventional banks. This condition does not hold, however, when we compare state-owned Islamic and conventional banks. We also find some specific determinants of Islamic banks’ market power: the Ramadan holy month (positive impact), the proportion of profit-and-loss sharing in their financing (negative impact), and the presence of a Sharia board (positive impact). Interestingly, Ramadan benefits not only Islamic banks but also conventional banks. Our findings support prior literature emphasizing the role of religiosity in Islamic banks’ behavior.