Category Archives: ORIGINAL ARTICLE

The impact of COVID‐19 pandemic on the Thai economy and the effectiveness of monetary policy: A Bayesian DSGE model approach

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Abstract

This study estimates a medium-scale dynamic stochastic general equilibrium model for the Thai economy to evaluate the impact of the COVID-19 pandemic containment policy on key macroeconomic aggregates. The shock to labor supply is considered as the main transmission channel. The paper discussed the role of monetary policy in regard to economic recovery and also identified the dominant shocks driving the business cycle. Thai quarterly series from 2011Q1 to 2021Q2 is used for the Bayesian estimation of the model. Though the pandemic shock caused a sharp decline in output, consumption and investment, the results suggest a fast recovery in the growth rates of the variables in about 2.5 years. At the same time, the dominant shocks that account for output variation in the medium to long term are investment, labor supply and productivity shocks. Monetary policy is effective in shortening the recovery due to its impact on private investment. The key drivers of Thai household consumption in the long run are investment, labor supply and productivity shocks. On average, the investment shock appears to be the key driver of the business cycle at all horizons.

Family planning and fertility inequality: Evidence from the abolition of China’s one‐child policy

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Abstract

This study takes China's one-child policy (OCP)—a widely known policy intervention for family planning—as an example to illustrate that an income-based penalty scheme for above-quota births may cause fertility inequality. A couple can legally have only one child under the OCP, and those who exceed the quota are subject to fines. To ensure that this penalty scheme does not biasedly affect only low-income people who are relatively more sensitive to fines of a certain amount, it was designed to be income-based, which makes the perceived cost of the rich equal to that of the poor. However, we find that due to the limited liability nature of the financial penalty, it unintentionally created fertility inequality that favors the poor. Relying on city-year-level panel data, we find that this mechanism partly explains the lower birth rates in rich cities in the OCP era; the gap narrowed rapidly after the OCP abolition.

The impact of compulsory primary education law on the educational attainment of children: Evidence from Vietnam

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This study examines the short-term impact of the compulsory primary education law (CPEL) on the educational attainment of children in Vietnam. This study uses the 1999 Vietnam Population and Housing Census and survival analysis to account for the right-censoring problem in the educational outcomes of children. The study found that CPEL reduces the dropout rate of children by 12%. However, the effect is minor, especially when compared with the impact of family income and parents' education. This finding is similar to those of other studies, suggesting that in addition to CPEL, other family income support and parent-oriented policies are crucial to improving children's educational attainment.

Does economic self‐interest determine public attitudes toward immigrants? An econometric case study in Japan

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Abstract

We examine two economic self-interest hypotheses regarding the determinants of public attitudes toward immigrants: (1) the labor market hypothesis, which states that the employment and wage impacts of immigration determine the public attitudes, and (2) the welfare state hypothesis, which states that natives hold negative perceptions of immigrants due to concerns that they may strain the country's welfare budget. The first hypothesis predicts that natives' education will affect pro-immigrant attitudes more positively when immigrants come from lower income countries. The second hypothesis predicts that natives' income affects the pro-immigrant attitudes more negatively when immigrants come from lower income countries. We use the Japanese General Social Survey, which asks respondents' tolerance toward immigrants from different countries, allowing us to control for unobserved individual characteristics through a method akin to the fixed effect estimation. Our results indicate no difference in the effects of education and income on pro-immigrant attitudes regardless of whether immigrants come from high- or low-income countries. We conclude that economic self-interest does not explain Japanese public attitudes toward immigrants. We discuss the policy implications about how to improve public attitudes toward immigrants.

Did economic cooperation encourage trade in essential medical goods? Empirical evidence from the Asia–Pacific during COVID‐19

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Abstract

Our paper empirically investigates the role of economic cooperation involving trade in coronavirus disease (COVID-19)-related essential medical goods—vaccines and their value chains, personal protective equipment, and diagnostic test kits—across 29 Asia and the Pacific economies. The paper incorporates vaccines and their global value chain products trade for the first time in the empirical literature. We further investigate whether trade facilitation, proxied by membership in regional trade agreements (RTAs), can help mitigate any adverse impact on trade in essential medical goods, applying a structural gravity framework. The results confirm that while trade is critical for Asian economies, its nature differs. Low-income economies are largely dependent on imports, whereas selected middle- and high-income economies are part of two-way trade and engaged in the low end of the vaccine value chain. We find that the onset of the pandemic has hurt exports of these goods. This adverse effect is found to be lowered for economies engaged in RTAs. This emphasizes the role of governments in committing to RTAs and implementing trade facilitation measures.

Machine learning to predict grains futures prices

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Abstract

Accurate commodity price forecasts are crucial for stakeholders in agricultural supply chains. They support informed marketing decisions, risk management, and investment strategies. Machine learning methods have significant potential to provide accurate forecasts by maximizing out-of-sample accuracy. However, their inherent complexity makes it challenging to understand the appropriate data pre-processing steps to ensure proper functionality. This study compares the forecasting performance of Long Short-Term Memory Recurrent Neural Networks (LSTM-RNNs) with classical econometric time series models for corn futures prices. The study considers various combinations of data pre-processing techniques, variable clusters, and forecast horizons. Our results indicate that LSTM-RNNs consistently outperform classical methods, particularly for longer forecast horizons. In particular, our findings demonstrate that LSTM-RNNs are capable of automatically handling structural breaks, resulting in more accurate forecasts when trained on datasets that include such shocks. However, in our setting, LSTM-RNNs struggle to deal with seasonality and trend components, necessitating specific data pre-processing procedures for their removal.

Does the proliferation of smartphones reduce consumer search costs? The case of the Korean gasoline market

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Abstract

This study treats the introduction of smartphones and access to the Korean gasoline market as a natural experiment, investigating how they affect consumer search costs. We estimate consumer search costs in different regional districts in Seoul and examine how smartphone proliferation affects search costs. Our findings indicate that the widespread use of smartphones reduced consumer search costs, and this reduction was more significant in districts with higher competition across firms. We can also infer that reduced search costs narrowed the market's dispersion of prices and markups.

Impact of the Ruble exchange rate regime and Russia’s war in Ukraine on wheat prices in Russia

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We assess exchange rate pass-through when the Ruble exchange rate was managed in comparison with when it became free-floating. Estimates of the error correction model for milling wheat prices suggest exchange rate pass-through to be strongest in Russia's North Caucasus, the region closest to the Black Sea ports, and weakest in the remote regions of Volga and West Siberia since the Ruble exchange rate became free-floating in 2014. In contrast, we find Russian regional wheat prices and the Ruble/USD exchange rate not cointegrated when the exchange rate was managed. Further, feed wheat (Class 5) is only weakly integrated compared to wheat Classes 3 and 4 for human consumption. With Russia's invasion of Ukraine, exchange rate pass-through to Russian wheat prices has decreased sharply. Thus, the Ukraine war drives the disintegration of Russia's wheat sector from international markets and adds to the risks of supply chain disruption and geopolitical risks, which may increase export supply volatility. To strengthen trade resilience, countries that are dependent on wheat imports should diversify their import sources.

On the willingness to pay for food sustainability labelling: A meta‐analysis

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Abstract

Sustainability labelling is an extremely complex, multifaceted, and debated topic. Through a systematic and meta-analytical approach, we disentangled the informative contents of environmental and social labels and investigated their effect on the consumer willingness to pay for food products. The premium prices for sustainability labels are largely heterogeneous depending on the information disclosed. Generic and specific messages seem not to differ in terms of consumer acceptance. Not all facets are equally important as social issues tend to be less considered. Policy interventions should combine hard and soft measures to holistically achieve sustainability in the food system.

Price support policy and market price dynamics: The case of Indian wheat

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The study investigates the effect of price support policies on market price distribution and its dynamics in the Indian wheat market. The analysis uses a quantile autoregression model that provides a flexible representation of price dynamics and the 2001–2020 monthly wholesale market price data. The analysis is conducted conditional on the net stock level held in the previous period. The results reveal that the net purchase by the government prevented very low market prices for wheat but resulted in price spikes. It has a price-enhancing effect as well. The associated moments of price distribution show that public stockholding reduced variation in market price distribution. However, the government's release of stock did not prevent price rises. Findings show that dynamic adjustments tend to be qualitatively different across regimes. Government intervention in the grain market reduced stability through dynamic adjustments in wheat market prices. The results have policy implications for India and other countries in Southeast Asia in the context of the WTO's negotiations on public stockholdings and using public stockholdings as an instrument in addressing price volatility and food shortages.