Economics Commons^™

Education, Technological Progress And Economic Growth, Winston T. H. Koh, Hing-Man Leung

Research Collection School Of Economics

An important role of education – and the resultant accumulation of human capital – for a less-developed economy is to facilitate technology diffusion in order for it to catch up with developed economies. This paper presents a model linking education, the accumulation of physical capital and technological progress. In the model, investment in education and the accumulation of physical capital are complementary, and intertwine with the technology progress through related effects on technology diffusion and the expansion of the technology frontier. The allocation of effort to education, the optimal savings rate and the technology gap are endogenously determined in the …

The Micro-Foundations Of Intertemporal Price Discrimination, Winston T. H. Koh

Research Collection School Of Economics

This paper investigates the optimality of intertemporal price discrimination for a durable-good monopoly in a model where infinitely-lived households face an intertemporal budget constraint, and consume both durable goods and non-durable goods. We prove that the optimal price of the durable good is not constant, and may decrease or increase over time. Some households may choose to purchase the durable good at a later date, and pay lower or higher prices, since the gain in discounted utility of consuming more of the non-durable good more than compensates for the loss in utility from delaying the consumption of the durable good.

A Bootstrap Test For Conditional Symmetry, Liangjun Su, Sainan Jin

Research Collection School Of Economics

This paper proposes a simple consistent non-parametric test of conditional symmetry based on the principle of characteristic functions. The test statistic is shown to be asymptotically normal under the null hypothesis of conditional symmetry and consistent against any conditional asymmetric distributions. We also study the power against local alternatives, propose a bootstrap version of the test, and conduct a small Monte Carlo simulation to evaluate the finite-sample performance of the test.

The Creation And Economic Regulation Of Housing Markets: A Comparison Of The Experiences Of Singapore And Korea, Sock-Yong Phang

Research Collection School Of Economics

Privatization, creation of markets and economic regulation are terms that few would immediately associate with the housing sector. Mainstream housing markets in most of the free market economies of the developed world are regarded as competitive markets, with little need for economic regulation of the market. Regulations that attempt to control behavior directly are generally limited to policies relating to rent control, the provision of rental housing or rental allowances for lower income groups, as well as land use regulations and building controls.

The housing sectors of Singapore and Korea are highly unusual in the extent of government involvement and …

Effects Of Electronic Trading On The Hang Seng Index Futures Market, Joseph K. W. Fung, Donald Lien, Yiuman Tse, Yiu Kuen Tse

Research Collection School Of Economics

This investigation of the switch from open-outcry trading to electronic trading on the Hang Seng Index (HSI) futures contract reveals that the bid–ask spread narrows and the futures price plays more of a role in information transmission. Factors, such as anonymity in trading and fast order execution in electronic trading, attract informed traders to the futures market, enhancing the information flow. Our results provide support for the worldwide trend of transforming open-outcry markets into electronic trading platforms

The Structuralist Perspective On Real Exchange Rate, Share Price Level And Employment Path: What Role Is Left For Money?, Edmund S. Phelps, Hian Teck Hoon, Gylfi Zoega

Research Collection School Of Economics

No abstract provided.

The Political Economy Of Polarized Pluralism, Salvatore Babones, Riccardo Pelizzo

Research Collection School of Social Sciences

It is difficult to overestimate the importance of Sartori’s party system typology at least because, as Peter Mair recently pointed out, “there has been very little new thinking on how to classify systems since the seminal work of Sartori” (Mair, forthcoming). The first important party system taxonomy was proposed by Duverger in his Political Parties (1951). Duverger in this classic study identified three types of party systems: the one party system, the two party system and the multi-party system. By the early 1960s Sartori had become quite unhappy with this typology (Sartori, 1982). Sartori thought that both the one-party and …

Analytically Calibrated Box-Cox Percentile Limits For Duration And Event-Time Models, Zhenlin Yang, Albert K.C. Tsui

Research Collection School Of Economics

This paper proposes a unified approach to constructing confidence limits for a future percentile duration or event-time. The construction is based on an analytical calibration of the Box-Cox-type “plug-in” percentile limits (PL). The performance of the calibrated Box-Cox PL is investigated using Monte Carlo experiments. Comparisons are made with PLs that are specifically designed for a particular distribution such as Weibull and lognormal. Excellent performances of the calibrated Box-Cox PL are observed. Simulation based on other popular duration models such as gamma and inverse Gaussian reveal that the proposed PL is robust against distributional assumptions and that it performs much …

L S Penrose's Limit Theorem: Tests By Simulation, Pao-Li Chang, Vincent Chua, Moshe Machover

Research Collection School Of Economics

LS Penrose’s limit theorem (PLT) – which is implicit in Penrose [5, p. 72] and for which he gave no rigorous proof – says that, in simple weighted voting games, if the number of voters increases indefinitely while existing voters retain their weights and the relative quota is pegged, then – under certain conditions – the ratio between the voting powers of any two voters converges to the ratio between their weights. Lindner and Machover [3] prove some special cases of PLT; and conjecture that the theorem holds, under rather general conditions, for large classes of weighted voting games, various …

An Analytical Framework For Science Parks And Technology Districts With An Application To Singapore, Cher Chiew Francis Koh, Teow Hock Winston Koh, Feichin Ted Tschang

Research Collection Lee Kong Chian School Of Business

This paper analyzes the question: what does it take for science parks and technology districts to evolve and grow? We propose an analytical framework to examine the gestation, evolution and sustainability of science parks and regional phenomena at a broader scale such as technology districts. The framework comprises three aspects of a science park's development: growth mechanisms, level of technological capabilities, and integration with national or global markets. The main growth mechanisms we identify are government-led infrastructure provision, agglomeration effects and continual self-renewal through the creation of new businesses. We apply this framework to analyze Singapore's science park strategy and …

Investing In Real Estate: Mortgage Financing Practices And Optimal Holding Period, Winston T. H. Koh, Edward H. K. Ng

Research Collection School Of Economics

Real estate investments are typically characterized by high degrees of leverage and long-loan tenures. In perfect capital markets, leverage has no impact on the investment decision apart from tax considerations. However, the mortgage financing market is imperfect in many countries. In the presence of market imperfections, an optimal holding period exists for real property investments. We provide a simple rule to calculate the optimal holding period to compare the required rate of return with the leveraged rate of return on equity.

On Measuring Influence In Non-Binary Voting Games, Vincent Chua, C. H. Ueng

Research Collection School Of Economics

In this note, we demonstrate using two simple examples that generalization of the Banzhaf measure of voter influence to non-binary voting games that requires as starting position a voter’s membership in a winning coalition is likely to incompletely reflect the influence a voter has on the outcome of a game. Generalization of the Banzhaf measure that takes into consideration all possible pivot moves of a voter including those moves originating from a losing coalition will, on the other hand, result in a measure that is proportional to the Penrose measure only in the ternary case.

Multivariate Stochastic Volatility Models: Bayesian Estimation And Model Comparison, Jun Yu, Renate Meyer

Research Collection School Of Economics

In this paper we show that fully likelihood-based estimation and comparison of multivariate stochastic volatility (SV) models can be easily performed via a freely available Bayesian software called WinBUGS. Moreover, we introduce to the literature several new specifications which are natural extensions to certain existing models, one of which allows for time varying correlation coefficients. Ideas are illustrated by fitting, to a bivariate time series data of weekly exchange rates, nine multivariate SV models, including the specifications with Granger causality in volatility, time varying correlations, heavy-tailed error distributions, additive factor structure, and multiplicative factor structure. Empirical results suggest that the …

Asymmetric Response Of Volatility: Evidence From Stochastic Volatility Models And Realized Volatility, Jun Yu

Research Collection School Of Economics

This paper examines the asymmetric response of equity volatility to return shocks. We generalize the news impact function (NIF), originally introduced by Engle and Ng (1993) to study asymmetric volatility under the ARCH-type models, to be applicable to both stochastic volatility (SV) and ARCH-type models. Based on the generalized concept, we provide a unified framework to examine asymmetric properties of volatility. A new asymmetric volatility model, which nests both ARCH and SV models and at the same time allows for a more flexible NIF, is proposed. Empirical results based on daily index return data support the classical asymmetric SV model …

Constructing A Coincident Index Of Business Cycles Without Assuming A One-Factor Model, Roberto S. Mariano, Yasutomo Murasawa

Research Collection School Of Economics

The Stock-Watson coincident index and its subsequent extensions assume a static linear one-factor structure for the component indicators. Such assumption is restrictive in practice, however, with as few as four indicators. In fact, such assumption is unnecessary if one defines a coincident index as an estimate of latent monthly real GDP. This paper considers VAR and factor models for latent monthly real GDP and other coincident indicators, and estimates the models using the observable mixed-frequency series. For US data, Schwartz’s Bayesian information criterion selects a two-factor model. The smoothed estimate of latent monthly real GDP is the proposed index.

Trans-Normal Distribution: A Flexible Model For Duration And Event-Time Data, Zhenlin Yang

Research Collection School Of Economics

A new family of distributions, called the trans-normal distribution is introduced. Its basic properties are presented. A closely related family of distributions called tran-t distribution is also given along with its basic properties. Trans-normal regression is used as an illustration on the usefullness of the new distribution.

Tests Of Transformation In Nonlinear Regression, Zhenlin Yang, Gemai Chen

Research Collection School Of Economics

This paper presents three versions of the Lagrange multiplier (LM) tests of transformation in nonlinear regression: (i) LM test based on expected information, (ii) LM test based on Hessian, and (iii) the LM test based on gradient. All three tests can be easily implemented through a nonlinear least squares procedure. Simulation results show that, in terms of finite sample performance, the LM test based on expected information is the best, followed by the LM test based on Hessian and then the LM test based on gradient. The LM test based on gradient can perform rather poorly. An example is given …

Modular Production Networks In Electronics: The Nexus Between Management And Economics Research, Byron Gangnes, Ari Van Assche

Research Collection School Of Economics

In the last two decades, the electronics industry has evolved from a vertically integrated industry to a vertically segmented one. This transformation has often been attributed to the modularization of electronic products. In this paper, we argue that the degree of modularity is an active choice variable for a firm. As a result, it is necessary to focus on the underlying factors that drive both modularity and the organization of production. This provides insights into the transformation taking place in global electronics production, with vertical fragmentation, horizontal consolidation, and the growth of Asian electronics production.

A Var Analysis Of Singapore's Monetary Transmission Mechanism, Hwee Kwan Chow

Research Collection School Of Economics

The Singapore economy has experienced greater business cycle fluctuations in recent years, being subject to recurrent shocks from the external environment. Given the extreme openness of the economy—Singapore’s export share of GDP is approximately 180%—it is not surprising that the main cause of the increase in economic volatility is a rise in the frequency and magnitude of exogenous shocks. These include the downswing in the global electronics industry in 1996–97, the Asian financial crisis in 1997–98, the burst of the information technology bubble in 2001, and the outbreak of the SARS respiratory disease in 2003. Such a close sequence of …

Future Fiscal And Budgetary Shocks, Hian Teck Hoon, Edmund S. Phelps

Research Collection School Of Economics

We study here the effects of future tax and budgetary shocks on present levels of economic activity and real interest rates in a nonmonetary and possibly non-Ricardian economy. The paper first takes up an (unanticipated) temporary tax cut to be effective on a given future date—a delayed debt bomb. The sudden prospect of this future-dated shock causes at once a drop in the (unit) value placed on the firms’ business asset, the customer, and accordingly on the price of shares—with the result that the hourly wage, hours worked and GDP drop in tandem. This paradox of reduced activity through announcement …

Board Structure, Political Influence And Firm Performance - An Empirical Study On Publicly Listed Firms In China, Dongping Han, Fusheng Wang, Heng Yue

Research Collection School Of Accountancy

The board of directors is the cornerstone of any effective corporate governance system. A well-structured board can effectively monitor and motivate management of a company for the benefit of the company's shareholders. This paper investigates the relationship between board structure and firm performance using a sample of 490 publicly listed firms in China. The characteristics of board structure we examined include: board size, inside/outside/independent directors, CEO/Chair duality, stock holdings of directors, the rewards to directors and aged directors. We find significant relationship between firm performance and three characteristics: the rewards to director, the stock holdings of directors and the existence …

The Politics Of Wto Enforcement Mechanism, Pao Li Chang

Research Collection School Of Economics

This paper attempts to develop a formal economic framework to analyze the influences of domestic political considerations by democratic governments in shaping the WTO enforcement outcomes following a violation ruling against the defendant. Since a different mix of import and export sectors in the defendant and complainant country will benefit from the various potential enforcement outcomes, they become competing forces which steer the strategic interactions between the disputing governments. The results of the paper illustrate the complainant's strategy in selecting the retaliation list, and the likelihood of the defendant's compliance or compensation in response to the proposed or foreseeable retaliation, …

The Optimal Design Of Fallible Organizations: Invariance Of Optimal Decision Criterion And Uniqueness Of Hierarchy And Polyarchy Structures, Winston T. H. Koh

Research Collection School Of Economics

We present a general framework to study the project selection problem in an organization of fallible decision-makers. We show that when the organizational size and the majority rule for project acceptance are optimized simultaneously, the optimal quality of decision-making, as determined by the decision criterion, is invariant, and depends only on the expertise of decision-makers. This result clarifies that the circumstances under which the decision-making quality varies with the organizational structure are situations where the organizational size or majority rule is restricted from reaching the optimal level. Moreover, in contrast to earlier findings in the literature that the hierarchy and …

The Politics Of Wto Enforcement Mechanism, Pao Li Chang

Research Collection School Of Economics

This paper attempts to develop a formal economic framework to analyze the influences of domestic political considerations by democratic governments in shaping the WTO enforcement outcomes following a violation ruling against the defendant. Since a different mix of import and export sectors in the defendant and complainant country will benefit from the various potential enforcement outcomes, they become competing forces which steer the strategic interactions between the disputing governments. The results of the paper illustrate the complainant's strategy in selecting the retaliation list, and the likelihood of the defendant's compliance or compensation in response to the proposed or foreseeable retaliation, …

Monotonicity Conditions And Inequality Imputation For Sample-Selection And Non-Response Problems, Myoung-Jae Lee

Research Collection School Of Economics

Under a sample selection or non-response problem, where a response variable y is observed only when a condition δ = 1 is met, the identified mean E(y|δ = 1) is not equal to the desired mean E(y). But the monotonicity condition E(y|δ = 1) ≤ E(y|δ = 0) yields an informative bound E(y|δ = 1) ≤ E(y), which is enough for certain inferences. For example, in a majority voting with δ being the vote-turnout, it is enough to know if E(y) > 0.5 or not, for which E(y|δ = 1) > 0.5 is sufficient under the monotonicity. The main question is then …

Estimation Of Hyperbolic Diffusion Using Markov Chain Monte Carlo Method, Yiu Kuen Tse, Xibin Zhang, Jun Yu

Research Collection School Of Economics

In this paper we propose a Bayesian method to estimate the hyperbolic diffusion model. The approach is based on the Markov chain Monte Carlo (MCMC) method with the likelihood of the discretized process as the approximate posterior likelihood. We demonstrate that the MCMC method Provides a useful tool in analysing hyperbolic diffusions. In particular, quantities of posterior distributions obtained from the MCMC outputs can be used for statistical inference. The MCMC method based on the Milstein scheme is unsatisfactory. Our simulation study shows that the hyperbolic diffusion exhibits many of the stylized facts about asset returns documented in the discrete-time …

Forecasting The Global Electronics Cycle With Leading Indicators: A Var Approach, Hwee Kwan Chow

Research Collection School Of Economics

Developments in the global electronics industry are typically monitored by tracking indicators that span a whole spectrum of activities in the sector. However, these indicators invariably give mixed signals at each point in time, thereby hampering efforts at prediction. In this paper, we propose a unified framework for forecasting the global electronics cycle by constructing a VAR model that captures the economic interactions between leading indicators representing expectations, orders, inventories and prices. The ability of the indicators to presage world semiconductor sales is first demonstrated by Granger causality tests. The VAR model is then used to derive the dynamic paths …

Production And Political Economy In The Animation Industry: Why Insourcing And Outsourcing Occur, Feichin, Ted Tschang, Andrea Goldstein

Research Collection Lee Kong Chian School Of Business

This paper presents a framework for explaining production patterns in creative industries. In particular, we focus on the conditions under which insourcing occurs in the US threedimensional animation industry and where outsourcing in the conventional two-dimensional animation industry occurs to the Philippines. The work that is outsourced is not the most creative component of the entire production process. Institutional decisions (as related to the location of decision makers and primary markets), and business conditions in the world market, have both positively and negatively affected the local Filipino industry and its position within the global division of labor. Implications for knowledge-based …

Multiple Testing To Establish Superiority/Equivalence Of A New Treatment Compared With K Standard Treatments For Unbalanced Designs, Koon Shing Kwong, Siu Hung Cheung, Wai-Sum Chan

Research Collection School Of Economics

In clinical studies, multiple superiority/equivalence testing procedures can be applied to classify a new treatment as superior, equivalent (same therapeutic effect), or inferior to each set of standard treatments. Previous stepwise approaches (Dunnett and Tamhane, 1997, Statistics in Medicine 16, 2489–2506; Kwong, 2001, Journal of Statistical Planning and Inference 97, 359–366) are only appropriate for balanced designs. Unfortunately, the construction of similar tests for unbalanced designs is far more complex, with two major difficulties: (i) the ordering of test statistics for superiority may not be the same as the ordering of test statistics for equivalence; and (ii) the correlation structure …

Expectations Formation And Forecasting Of Vehicle Demand: An Empirical Study Of The Vehicle Quota Auctions In Singapore, Sing-Fat Chu, Winston T. H. Koh, Yiu Kuen Tse

Research Collection School Of Economics

This paper studies the expectations formation and forecasting of vehicle demand in Singapore under the vehicle quota system. Under the system, a car buyer must first bid for a vehicle license in monthly auctions in order to purchase a new car. We construct an econometric model to test the hypothesis that past bid distributions of the license auctions contain information that car buyers can use to update their expectations about the intensity of market demand, forecast the license premiums and formulate their bidding strategies in future auctions. Our empirical analysis indicates that past bid distributions have a good degree of …