The Singapore Economic Review

The objective of this paper is to assess whether trade liberalisation has improved the structure of investment from domestic to export capacity in the Australian manufacturing sector. This has critical implications for export growth at a time of losses in the domestic marker emanating from the move towards free trade and hence production in this sector. The empirical results reveal trade liberalisation has played a major role in re-orienting investment towards export capacity which promotes quicker export growth thereby offsetting the losses in the domestic market and hence safeguarding manufacturing production.

Declining global multilateralism has brought numerous trade disputes, most notably between the US and China. Here, a new global model featuring monetary policy and revenue reassignment are used to examine the effects of this conflict and this macroeconomic perspective proves to be important. The emergent results provide additional insight and complement other “trade-focused” general equilibrium studies. We find that, with capacity adjustment, US unilateral protection emerges as “beggar thy neighbor” policy. China’s proportional losses are large, little mitigated by its retaliation, which nonetheless constrains US net gains. Third regions trading with China and the US suffer losses only partly offset by trade diversion and greatly enhanced if, to avoid leakage, protection is extended to all sources.

Using firm-level data from 7165 firms from Indian manufacturing, this paper explores the effects of firm age and size on its inclination to invest in research and development (R&D). The paper addresses the inadequately answered question on the choice between in-house R&D and technology purchase from foreign firms. To the best of author’s knowledge, this is the first study to examine the impact of age, size and technology transfer on firm’s inclination to invest in R&D for the manufacturing sector in India. Our results suggest that young firms are more likely to invest in R&D. A firm’s exports further increase its propensity towards R&D. Contrary to the previous results, we show that young and small firms possibly use in-house R&D as a complementary input with purchased foreign technology. Thereafter, policy prescriptions are drawn.

Along with the international trade and economic ties, international stock markets are performing increasingly closely. This paper investigates the volatilities and the return co-movements among three stock markets in mainland China, Hong Kong, and the United States, from January 1, 2007, to July 5, 2019. We use the MIDAS framework to separately characterize short-term and long-term features. The results reveal that different market volatilities have different sensitivities to the same events. After the second half of 2016, the volatility of China’s stock market gradually dropped below that of the other two markets. As for market co-movements, the return correlation between China and Hong Kong rose sharply after 2007. Although the co-movements for return rates among these three stock markets possess mutual dynamic synchronization features, deviations exist occasionally due to the emotional transfer of funds in the international market when a significant economic or financial event occurs. The analysis suggests that countries should stabilize the financial investment environment and guard against hot money activities.

This study estimates the profitability and marketability efficiencies’ scores and determinants of 114 Singapore listed manufacturing firms from 2007 to 2018 by adopting bootstrapped two-stage data envelopment analysis (DEA) as well as one- and two-part fractional regression models. The study reveals that the average marketability efficiency of Singapore listed manufacturing firms (0.881) is lower than the average profitability efficiency (0.970) during the study period. Further, the results show that the length of listing, headcount, institutional ownership, leverage ratio and high-technology production statistically affect the profitability and marketability efficiencies of Singapore listed manufacturing firms.

This paper empirically investigates the impact of China’s OFDI on the industrial structure upgrading of countries along the Belt and Road (B&R) and examines the threshold effect of the infrastructure levels on that impact based on the panel data of 52 B&R countries from 2006 to 2017. The results show that China’s OFDI can significantly promote the industrial structure upgrading of B&R countries and that the Belt and Road initiative implementation can help to strengthen the promoting effects of China’s OFDI in the comprehensive FGLS, the Diff-GMM and the System GMM estimation. Moreover, China’s technology transfer OFDI has the greatest promotion effect, followed by capital transfer OFDI; labor transfer OFDI has the least promotion effect. China’s OFDI plays a larger role in promoting the industrial structure upgrading of Central Asia and South Asia countries, followed by ASEAN and CIS countries and it plays a smaller role in West Asia and Central-Eastern Europe countries. There is a threshold effect of the B&R countries’ infrastructure level. When the transportation infrastructure, energy infrastructure, communication infrastructure and overall infrastructure levels exceed the corresponding thresholds, the promoting effect of China’s OFDI will be further enhanced in the comprehensive FGLS estimation. Our study proposes that under the Belt and Road initiative, to improve the infrastructure level of the B&R countries, and to increase the effectiveness of China’s OFDI in promoting the industrial structure upgrading of the B&R countries, China should further strengthen international cooperation, expand outward investment, and strengthen the infrastructure connectivity construction with B&R countries.

Pakistan is a country which is facing chronic trade deficit since its independence and currency devaluation have always remained an effective strategy to bridge this gap between imports and exports. Previous studies which assessed the influence of changes in exchange rate on Pakistan’s trade balance followed a symmetric or linear approach. However, in this study we adopt an asymmetric approach, according to which appreciations and depreciations have asymmetric effects on the trade balance of Pakistan. Using commodity trade data of 28 (2-digits) industries that trade between Pakistan and United Kingdom, we find pattern of the J-curve in nine industries when a linear model was estimated. However, when we estimated a nonlinear model, the concept of asymmetric J-curve was supported in 14 industries. The largest industry (clothing) which engages in 36.5% of the trade was found to benefit from rupee depreciation.

In this paper, China’s core inflation is defined as any price changes that are caused by the money supply. This definition is especially relevant to examining monetary policy because the money supply is controllable by China’s central bank. This paper develops a New Keynesian DSGE model with a quantity-based monetary rule that fits real aggregated data from China to analyze core inflation’s key characteristics. Eight different approaches are used to estimate core inflation in China. By constructing VAR models of output growth, money supply growth and core inflation, we estimate the response of core inflation measures to the money supply shock. By matching the response to money supply shocks in both the model and the data, we compare the performance of different core inflation measures for monetary policy in China.

Using longitudinal data from the German Socio-Economic Panel (GSOEP), this paper investigates how pro-active time-use (e.g., in sports/arts/socializing) relates to subjective well-being of the unemployed and their probability of finding a new job. Allowing for a variety of socio-demographic and -economic observed characteristics, we find that pro-activity is negatively associated with the well-being loss upon unemployment. That is, the negative unemployment shock on their well-being is mitigated through various stress-reducing activities including, in particular, art participation, socializing, going on trips and visiting a church. We also find that the probability of returning to the labor market later is positively associated with pro-activity during the unemployment period. The results are robust to various checks including estimators, measures and individual personality characteristics which can correlate with time-use activities.

Insurance penetration rate in Malaysia is low at only between 40% and 50%. Following the government’s policy goal of increasing the rate, this study examined metafrontier Malmquist productivity index (MMPI) and drivers of the MMPI among Malaysian insurers. Over the 2009–2017 period, general insurers and life insurers were technology leaders. General insurers had progressive productivity (MMPI) on average, whereas the MMPI values of the life and general insurers and life insurers were in deterioration. Overall, long-term strategic planning and capital investment alongside government’s liberalization to increase competition in the industry are thus necessary.

Incentive institutions that reward cooperators and punish free-riders are often used to promote cooperation in public goods games. We show that for incentives of intermediate size, a sanctioning institution that punishes the worst players can sustain full cooperation and that a rewarding institution can promote cooperation only if lower contributors also have the chance to win the reward. Furthermore, if the incentive institution can provide both reward and punishment, then it should use reward as much as possible. The group welfare is maximized when the punishment is just barely larger than the minimum required to obtain the full contribution.

To understand whether and how movements of government debt and household debt are related, stationary equilibrium government debt and household debt are characterized in a politico-economic model where office-seeking policymakers decide government debt and individual voters can borrow facing uninsurable idiosyncratic income shocks. An increase in uninsurable income risk unconditionally raises stationary equilibrium government debt and aggregate household debt together, while an increase in household-loan collateral value or population aging conditionally does so, entailing positive correlations between these two debts’ movements. In contrast, an increase in interest rate conditionally causes these two debts to move in the opposite directions.

This paper aims to re-estimate green total factor productivity (GTFP) with the consideration of intangible capital in Chinese provinces between 2003 and 2017. Intangible capital is broadly defined and categorized into computerized information, innovative property and economic competency property. The finding suggests that the conventional GTFP is underestimated especially during the post-financial crisis period in China. It is also found that technical efficiency, which shows the trend of deterioration without capitalizing intangibles, improves steadily and jointly with technological progress contributing to the improvement of productivity. The mismeasurement of GTFP is more severe in developed regions in China where intangible investment is more emphasized. Furthermore, regional GTFP shows the trend of convergence after intangible capital is incorporated and the rate of convergence turns to be faster in coastal regions than that in the interior.