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2002

Research Collection School Of Economics

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Full-Text Articles in Social and Behavioral Sciences

A Model Of Industrialization And International Wage Convergence Based On Multi-Plant Foreign Direct Investment, Hian Teck Hoon, Irene Ng Dec 2002

A Model Of Industrialization And International Wage Convergence Based On Multi-Plant Foreign Direct Investment, Hian Teck Hoon, Irene Ng

Research Collection School Of Economics

We show that for industrialization and international wage convergence through multi-plant foreign direct investment (FDI) to occur, the measure of the quality of the social infrastructure in the South relative to that in the North must be at least as large as the South-North wage ratio. We also show that if profitable FDI flows already take place from the North to the most productive economy in the South, then less productive Southern economies can also become recipients of FDI, provided that they are integrated into the world trading system, and there are no impediments to the decline of their wage …

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Is Ricardo's Essay On Profits A Precursor Of The New Trade Theory?, Hian Teck Hoon Dec 2002

Is Ricardo's Essay On Profits A Precursor Of The New Trade Theory?, Hian Teck Hoon

Research Collection School Of Economics

This paper carefully analyzes a passage of Ricardo’s Essay on Profits ([1815] 1923), which suggests that he clearly understood the effects of both interindustry as well as intraindustry trade. In the context of the Essay model, Ricardo argues that free interindustry trade involving an exchange of manufactures for agricultural good (from England’s point of view) raises the rate of profit through lowering the relative price of the agricultural good. On the other hand, where trade involves simply an exchange of manufactures for manufactures, these being produced under conditions of economies of scale (division of labour in manufactures (pg. 25 of …

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A Corrected Plug-In Method For The Quantile Confidence Interval Of A Transformed Regression, Zhenlin Yang, Yiu Kuen Tse Nov 2002

A Corrected Plug-In Method For The Quantile Confidence Interval Of A Transformed Regression, Zhenlin Yang, Yiu Kuen Tse

Research Collection School Of Economics

In this paper we propose an analytically corrected plug-in method for constructing confidence intervals of the conditional quantiles of a response variable with data transformation. The method can be applied to (i) a general conditional regression quantile, (ii) a general monotonic transformation, and (iii) a transformation model with heteroscedastic errors. Our results extend those in Yang (2002a), in which the median of a response variable under the Box-Cox transformation with homoscedastic errors was considered. A Monte Carlo experiment is conducted to compare the performance of the corrected plug-in method, the plug-in method and the delta method. The corrected plug-in method …

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Tax Cuts, Employment And Asset Prices: A Real Intertemporal Model, Hian Teck Hoon, Edmund S. Phelps Nov 2002

Tax Cuts, Employment And Asset Prices: A Real Intertemporal Model, Hian Teck Hoon, Edmund S. Phelps

Research Collection School Of Economics

We determine the effects of a delayed or immediate tax cut with or without a sunset feature in a real customer-market, nonRicardian economy. Our model incorporates both the supply-sider channel, through which reduced wage income taxes stimulate work effort, as well as the Feldstein-Rubin-Summers channel, through which cuts in income tax, in widening the deficit and thus driving up future short real interest rates, has a chilling effect on present and future investment, so reducing growth and employment on that account. After establishing conditions under which fiscal policy is sustainable, we first show that a delayed tax cut may depress …

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Venture Capital And Economic Growth: An Industry Overview And Singapore's Experience, Francis Koh, Winston T. H. Koh Nov 2002

Venture Capital And Economic Growth: An Industry Overview And Singapore's Experience, Francis Koh, Winston T. H. Koh

Research Collection School Of Economics

This paper provides an overview of the venture capital industry, and its development in Asia and Singapore. Venture capital plays an important role in innovation and economic growth. Indeed, the resurgence of the United States as a technology leader is intimately linked to the success of Silicon Valley. As Singapore enters the next phase of economic development, the creation of internal engines of growth is an urgent task. The Singapore government has done much to provide an environment for entrepreneurship to thrive. Its success at replicating the Silicon Valley culture will be important for Singapore’s future economic success.

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Bulgaria Poverty Assessment (Report No. 24516-Bul), Dena Ringold, Gero Carletto, Tomoki Fujii, Et Al Oct 2002

Bulgaria Poverty Assessment (Report No. 24516-Bul), Dena Ringold, Gero Carletto, Tomoki Fujii, Et Al

Research Collection School Of Economics

No abstract provided.

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The Kpss Test With Seasonal Dummies, Sainan Jin, Sainan Jin Oct 2002

The Kpss Test With Seasonal Dummies, Sainan Jin, Sainan Jin

Research Collection School Of Economics

It is shown that the KPSS test for stationarity may be applied without change to regressions with seasonal dummies. In particular, the limit distribution of the KPSS statistic is the same under both the null and alternative hypotheses whether or not seasonal dummies are used.

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On The Performance Of Geometric Chart With Estimated Control Limits, Zhenlin Yang, Min Xie, Vellaisamy Kuralmani, Kwok-Leung Tsui Oct 2002

On The Performance Of Geometric Chart With Estimated Control Limits, Zhenlin Yang, Min Xie, Vellaisamy Kuralmani, Kwok-Leung Tsui

Research Collection School Of Economics

The control chart based on the geometric distribution (geometric chart) has been shown to be competitive with p- or np-charts for monitoring the proportion nonconforming, especially for applications in high quality manufacturing environments. However, implementing a geometric chart is often based on the assumption that the in-control proportion nonconforming is known or accurately estimated for a high quality process, an accurate parameter estimate may require a very large sample size that is seldom available. In this paper we investigate the sample size effect when the proportion nonconforming is estimated. An analytical approximation is derived to compute shift detection probabilities and …

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Market Segmentation And Information Values Of Earnings Announcements: Some Empirical Evidence From An Event Study On The Chinese Stock Market, Yu Gao, Yiu Kuen Tse Oct 2002

Market Segmentation And Information Values Of Earnings Announcements: Some Empirical Evidence From An Event Study On The Chinese Stock Market, Yu Gao, Yiu Kuen Tse

Research Collection School Of Economics

This paper investigates the trading activities of two distinct classes of shareholders, namely, the Chinese domestic investors and the foreign investors in the segmented Chinese A-share and B-share markets, respectively. We conduct an event study on the annual earnings announcements based on two different accounting standards: IAS and PRC GAAP. The earnings announcements based on IAS and PRC GAAP are value relevant. The investors in the B-share market react to both the IAS and PRC GAAP earnings announcements, while the investors in the A-share market pay more attention to the PRC GAAP earnings reports. In the B-share market, positive abnormal …

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The General Dominance Of Lottery Over Waiting-Line Auction, Winston T. H. Koh, Zhenlin Yang, Lijing Zhu Sep 2002

The General Dominance Of Lottery Over Waiting-Line Auction, Winston T. H. Koh, Zhenlin Yang, Lijing Zhu

Research Collection School Of Economics

This paper examines the allocative efficiency of two popular non-price allocation mechanisms — the lottery (random allocation) and the waiting-line auction (queue system) — for the cases where consumers possess identical time costs (the homogeneous case), and where time costs are correlated with time valuations (the heterogeneous case). We show that the relative efficiency of the two mechanisms depends critically on the scarcity factor (measured by the ratio of the number of objects available for allocation over the number of participants) and on the shape of the distribution of valuations. We obtain a set of analytical results showing that the …

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The Evolution And Utilization Of The Gatt/Wto Dispute Settlement Mechanism, Pao Li Chang Aug 2002

The Evolution And Utilization Of The Gatt/Wto Dispute Settlement Mechanism, Pao Li Chang

Research Collection School Of Economics

This paper attempts to study the usage of the GATT/WTO dispute settlement mechanism and to explain its patterns across different regimes and decades, using a unified theoretical model. This study first explores the role of the degree of legal controversy over a panel ruling in determining countries’ incentives to block/appeal a panel report under the GATT/WTO regime. The model is able to explain the surge in blocking incidence during the 1980s over the preceding GATT years and the immense frequency at which the new appellate procedure under the WTO is invoked. Furthermore, a two-sided asymmetric information framework is used to …

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A Misspecification-Robust Impulse Response Estimator, Pao Li Chang, Shinichi Sakata Aug 2002

A Misspecification-Robust Impulse Response Estimator, Pao Li Chang, Shinichi Sakata

Research Collection School Of Economics

Impulse response analysis is typically conducted by fitting an autoregression model to a time series and calculating the moving average coefficients implied by the estimated autoregression model. The possible shape and persistence of the impulse response function implied by a parsimonious autoregression specification are very limited. This paper proposes an alternative approach to estimating impulse response function, which is asymptotically valid yet is less sensitive to model misspecifications in small samples. The small sample advantages of the proposed impulse response estimator over the conventional approach is demonstrated by Monte Carlo studies. The large sample validity of the proposed estimator is …

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Endogenous Tariff Formation With Intra-Industry Trade, Pao-Li Chang Aug 2002

Endogenous Tariff Formation With Intra-Industry Trade, Pao-Li Chang

Research Collection School Of Economics

Previous theoretical contributions on endogenous tariff formation have focused on trade models with homogeneous goods and constant returns to scale. This paper investigates the political equilibrium of trade policy when economic structure is instead characterized by differentiated products and increasing returns to scale and there exists intra-industry trade. The result shows that endogenous tariffs are positive for all industries with non-negligible shares of world production. However, the level of protection is less than the optimal tariff that would otherwise be imposed by a benevolent government in an unorganized industry, and higher in an organized industry. The protection provided to all …

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A Modified Family Of Power Transformations, Zhenlin Yang Jul 2002

A Modified Family Of Power Transformations, Zhenlin Yang

Research Collection School Of Economics

A modified family of power transformation, called the Dual Power Transformation, is proposed, which overcomes the truncation problem of the Box-Cox power transformation. The new transformation possesses properties similar to those of the Box-Cox power transformation. It generates a rich family of distributions that is seen to be very useful in modeling and analysis of economic durations and medical/engineering event-times. Further, it gives rise to transformed (regression) models such that all the standard asymptotic results of the maximum likelihood theory apply. Empirical results presented are more favorable to the new transformation than to the Box-Cox power transformation in terms of …

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The Implications Of Technology Networks On Diffusion And Economic Growth, Hing-Man Leung Jul 2002

The Implications Of Technology Networks On Diffusion And Economic Growth, Hing-Man Leung

Research Collection School Of Economics

After the record-breaking run of high-speed growth in the United States during the late 1990s, a pressing question is Has anything fundamental changed in our growth engine? This paper examines an IT-led endogenous growth model driven by technology diffusion. Diffusion is in turn driven by network effect embodied in new technologies. The equilibrium long-term growth rate is however found to be independent of such technology networks. A novelty in our model is that innovation is discontinuous and it is separated by periods of diffusion. This (IT) network-diffusion is shown to be Sigmoid, and diffusion speed is slower than socially optimal.

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Exchange-Rate Systems And Interest-Rate Behavior: The Experience Of Hong Kong And Singapore, Yiu Kuen Tse, Paul S. L. Yip Jul 2002

Exchange-Rate Systems And Interest-Rate Behavior: The Experience Of Hong Kong And Singapore, Yiu Kuen Tse, Paul S. L. Yip

Research Collection School Of Economics

In this paper we consider the implications of the two different exchange-rate systems in Hong Kong (HK) and Singapore (SP) on the economic performance of these two economies. While HK has a pegged exchange-rate regime under a currency board system (CBS), SP has a managed-float system with monitoring band. We examine whether the managed-float system of SP provides an advantage over the rigid CBS of HK in mitigating the recession caused by the Asian Financial Crisis (AFC), and the implications of the differences in the exchange-rate systems on interest-rate behaviour. Our empirical results show that the monitoring band system in …

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The Impact Of Housing Prices On Aggregate Consumption: Evidence From An East Asian City-State, Sock-Yong Phang Jul 2002

The Impact Of Housing Prices On Aggregate Consumption: Evidence From An East Asian City-State, Sock-Yong Phang

Research Collection School Of Economics

Using aggregate consumption data for Singapore, this paper rejects the life-cycle/permanent income and myopia hypotheses as explanations for aggregate consumption behavior. We confirm the presence of liquidity constraints from the asymmetric reaction of consumption to income increases vis-a-vis income declines. When we allow for asymmetric response, anticipated house price increases appear to have a dampening effect on aggregate consumption while declines in expected house price growth also had a negative effect on consumption, although the results are statistically insignificant. There is no evidence that the housing price increases have produced either wealth or collateral enhancement effects on consumption.

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Optimal Organizational Design In A Dichotomous-Choice Project Selection Model, Winston T. H. Koh Jul 2002

Optimal Organizational Design In A Dichotomous-Choice Project Selection Model, Winston T. H. Koh

Research Collection School Of Economics

This paper studies collective decision making in the context of a project selection model. We derive the optimal decision architecture when marginal decision costs are present, and investigate the circumstances under which the hierarchy and polyarchy exist as optimal sequential architectures. Our analysis extends previous results on optimal committee decision-making to a sequential setting, and further demonstrates the fragility of the hierarchy and polyarchy as optimal architectures.

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Growth And Volatility, Hing-Man Leung Jun 2002

Growth And Volatility, Hing-Man Leung

Research Collection School Of Economics

This paper has two objectives. First, to establish empirically a U-shaped relation between GDP growth rate and income volatility. The backward as well as the fast-growing countries have had extensive volatility; but developed nations by contrast have enjoyed much more stable income. Second, to present a macroeconomic model to study how growth and volatility evolve together. The twin endogenous variables are financial liberalization interacting with liquidity constraints. Opening LDC financial markets could raise or lower their long-term income and growth rates, depending on the severity of existing liquidity constraints. Financial liberalization and removing financial market imperfections unambiguously worsen income volatility.

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Strategic Development Of Airport And Rail Infrastructure: The Case Of Singapore, Sock-Yong Phang Jun 2002

Strategic Development Of Airport And Rail Infrastructure: The Case Of Singapore, Sock-Yong Phang

Research Collection School Of Economics

This article recounts how a number of strategic infrastructure investment decisions in airport and rail development taken by the Singapore government were at variance with recommendations emerging from Cost-Benefit Analysis, but were considered necessary to support external competitiveness. This link between infrastructure provision and economic development may require decision makers to assess the trade-off between prudent macro-economic planning and efficient micro-economic management for major projects. In the case of airport hubs, the most difficult assessment might be the game consideration of how much, and how far ahead, excess capacity is needed to ensure the dominance of the hub.

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How Should We Interpret Evidence Of Time Varying Conditional Skewness?, Gamini Premaratne, Anthony S. Tay Jun 2002

How Should We Interpret Evidence Of Time Varying Conditional Skewness?, Gamini Premaratne, Anthony S. Tay

Research Collection School Of Economics

Several recent articles report evidence of predictability in the skewness of equity returns, raising hopes that predictability in third moments will be useful for forecasting the probability of tail events. The evidence is unfortunately difficult to interpret, partly because they were obtained mainly from parametric models of time-varying conditional skewness, and because little is known about the behavior of such models, for instance, when there are outliers. We investigate a non-parametric approach to testing for predictability in skewness. Specifically, we explore the size and power of a Runs tests, and compare this approach with other tests. A re-examination of daily …

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Potential For Floating Offshore Wind Energy In Japanese Waters, A. R. Henderson, R. Leutz, Tomoki Fujii May 2002

Potential For Floating Offshore Wind Energy In Japanese Waters, A. R. Henderson, R. Leutz, Tomoki Fujii

Research Collection School Of Economics

The prospects for large scale commercialisation of sea-bed-mounted offshore windfarms are currently excellent, with the existing small-scale prototype windfarms currently being joined by the first large-scale parks in the shallow seas off the Danish, German, Swedish, Dutch, Belgian, British and Irish coasts. However other countries, including Japan, have much more limited regions of the shallow waters suitable for such developments and hence other concepts will also need to be utilised if offshore wind energy is also to become a major source of energy there.

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Markov Chains In Predictive Models Of Currency Crises - With Applications To Southeast Asia, Roberto S. Mariano, Abdul G. Abiad, Gultekin Bulent, Tayyeb Shabbir, Augustine H. H. Tan May 2002

Markov Chains In Predictive Models Of Currency Crises - With Applications To Southeast Asia, Roberto S. Mariano, Abdul G. Abiad, Gultekin Bulent, Tayyeb Shabbir, Augustine H. H. Tan

Research Collection School Of Economics

The decade of the 1990s was marked by an unusual number of financial and economic crises such as the attack on the European Monetary System in 1992-93, the Mexican peso crisis in 1994-95, the Asian crisis in 1997, the Russian default in 1998 and its spillover to Latin America. The Turkish currency and banking crisis in 2001 and the recent difficulties in Argentina indicate that financial crises are still part of the current economic events. In the wake of such developments, there has been a resurgence of interest in early warning systems that can anticipate the likely occurrence of such …

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A New Coincident Index Of Business Cycles Based On Monthly And Quarterly Series, Roberto S. Mariano, Yasutomo Murasawa Apr 2002

A New Coincident Index Of Business Cycles Based On Monthly And Quarterly Series, Roberto S. Mariano, Yasutomo Murasawa

Research Collection School Of Economics

Popular monthly coincident indices of business cycles, e.g. the composite index and the Stock-Watson coincident index, have two shortcomings. First, they ignore information contained in quarterly indicator such as real GPD. Second, they lack economic interpretation; hence the heights of peaks and the depths of troughs depend on the choice of an index. This paper extends the Stock-Watson coincident index by applying maximum likelihood factor analysis to a mixed-frequency series of quarterly real GDP and monthly coincident business cycle indicators. The resulting index is related to latent monthly real GDP.

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A Class Of Nonlinear Stochastic Volatility Models, Jun Yu, Zhenlin Yang Apr 2002

A Class Of Nonlinear Stochastic Volatility Models, Jun Yu, Zhenlin Yang

Research Collection School Of Economics

This paper proposes a class of nonlinear stochastic volatility models based on the Box-Cox transformation which offers an alternative to the one introduced in Andersen (1994). The proposed class encompasses many parametric stochastic volatility models that have appeared in the literature, including the well known lognormal stochastic volatility model, and has an advantage in the ease with which different specifications on stochastic volatility can be tested. In addition, the functional form of transformation which induces marginal normality of volatility is obtained as a byproduct of this general way of modeling stochastic volatility. The efficient method of moments approach is used …

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Less Developed Country Business Cycles, Hing-Man Leung Mar 2002

Less Developed Country Business Cycles, Hing-Man Leung

Research Collection School Of Economics

Less developed countries (LDCs) have experienced considerable business cycles in recent decades. This coincides with significant increases in their external debt to GDP ratios. Recent theoretical credit cycles literature suggests that indebtedness, and the resulting liquidity constraints, could explain LDC business cycles. This paper builds a macroeconomic model to trace the LDC income paths. In this model indebtedness and liquidity constraints reduce aggregate investment. We use the World Data (1995) to calibrate for the convergence parameter. It is found that LDC cycles are convergent and non-oscillatory, and indebtedness delays the return to long-term steady state income.

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Endogenous Growth And The Manufacturing Revolution, Hing-Man Leung Mar 2002

Endogenous Growth And The Manufacturing Revolution, Hing-Man Leung

Research Collection School Of Economics

Manufacturing is undergoing a revolution. Teamwork, job-rotation, multitasking are superseding the Taylorist mode of organization. The skilled workforce, armed with automated machines, is gradually substituting and replacing the unskilled. At the same time the U.S. economy is experiencing record breaking growth. Is faster growth a consequence of this manufacturing revolution? We study this by inserting dynamic career choice into endogenous growth by human capital accumulation. The answer is affirmative: The gradual substitution of the unskilled by the skilled boosts the long-term growth trend. The model also explains worsening wage inequality between as well as within the skilled groups.

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Networked Growth, Hing-Man Leung Mar 2002

Networked Growth, Hing-Man Leung

Research Collection School Of Economics

This paper searches for a new growth engine in the new Info-Tech economy. IT-network effects are incorporated into Romer’s (1990) framework. Network effects support long-term steady state growth in per capita variables even without innovation, and growth rate increases with network externalities. Networked growth is sub-optimal, so should we break up an IT monopoly? To answer this we compare monopoly, Cournot and Bertrand set-ups. Cournot always ranks last socially, but Bertrand can be superior to monopoly if network effects are strong. When network interacts with Romer’s endogenous innovation, growth rate increases, probably by up to a percentage point per year.

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Isotonic Designs For Phase I Trials, Denis H. Y. Leung, You-Gan Wang Feb 2002

Isotonic Designs For Phase I Trials, Denis H. Y. Leung, You-Gan Wang

Research Collection School Of Economics

The purpose of a phase I trial in cancer is to determine the level (dose) of the treatment under study that has an acceptable level of adverse effects. Although substantial progress has recently been made in this area using parametric approaches, the method that is widely used is based on treating small cohorts of patients at escalating doses until the frequency of toxicities seen at a dose exceeds a predefined tolerable toxicity rate. This method is popular because of its simplicity and freedom from parametric assumptions. In this paper, we consider cases in which it is undesirable to assume a …

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Endogenous Growth And Equilibrium Unemployment In A North-South Model Of The World Economy, Hian Teck Hoon Feb 2002

Endogenous Growth And Equilibrium Unemployment In A North-South Model Of The World Economy, Hian Teck Hoon

Research Collection School Of Economics

A North-South model is developed which incorporates an endogenous rate of equilibrium unemployment in the North in the context of long-run growth. It is shown how increases in the size of public debt and unemployment compensation financed by payroll taxation, all measured relative to productivity, raise the Northern natural rate of unemployment and, consequently, reduce the global rate of long-run growth. The effect of the shocks is also to drive down the rate of employment expansion in the South. A set of the fundamental determinants of the world terms of trade is obtained, which includes policy parameters.

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