ISSN: 2056-3736 (Online Version) | 2056-3728 (Print Version)
Nachiket Thakkar and Kiran Ambreen Ayub
Correspondence: Nachiket Thakkar, nachiket.thakkar@aamu.edu
Department of Accounting and Finance, Alabama A&M University, Huntsville
pdf (467.14 Kb) | doi: https://doi.org/10.47260/bae/9213
We analyze the effect of a country’s defaults and restructuring its’ official and private external debt on its ability to attract foreign direct investment. We use different types of foreign direct investments: FDI Flows, Horizontal FDI, vertical FDI, cross-border mergers & acquisitions, and greenfield FDI. Using the Poisson-Pseudo Maximum Likelihood (PPML) estimation method, which has never been used in the literature to do a similar analysis, we find that external debt default decreases all types of FDIs. Furthermore, we also conduct a more granular sensitivity analysis by analyzing the effect of political risk ratings, effect on non-advanced economies, and effect on highly indebted poor countries (HIPC). We find that cross-border mergers and acquisitions (M&A) decrease as corruption risk decreases and increases as law and order improve. For HIPC countries, official external debt restructuring increases greenfield FDI.
Debt Default, Restructuring, Foreign Direct Investment (FDI), External Debt, ICRG, Poisson-Pseudo Maximum Likelihood (PPML), Political Risk.
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Max Weber, Taha Chaiechi and Rabiul Beg
Correspondence: Max Weber, max.p.weber@gmail.com
School of Management and Law, Zurich University of Applied Sciences (ZHAW)
pdf (467.14 Kb) | doi: https://doi.org/10.47260/bae/9212
Addressing urgent global climate change and inequality issues has been a major challenge for the ten AMS (ASEAN Member States) given the diversity and local agendas with divergent political, economic, and social objectives. While regional policy frameworks prioritise harmonisation and inter-regional integration outcomes over national inequality and climate change policy goals, governments typically address the latter through discretionary policy add-ons that lead to policy fragmentation and competing fiscal goals that interfere with intermediate development plans. To achieve the aspired inequality outcomes (Regional Framework and Action Plan, ASEAN Declaration, 2013) and the ratified global climate targets (Paris Treaty 2015) simultaneously, such policy outcomes and commitments to collaborative policy action will need to be aligned within an integrated policy framework at the regional or global level, and externalities of economic activity internalised into a sustainable and inclusive fiscal model. Focusing on policy design, integration and evaluation aspects, this paper tests the hypothesis that, given the urgency of these issues, the ASEAN governments devised corrective and preventive measures to systematically mitigate these externalities through intervention at the policy level and multilateral coordination at the regional and global levels to achieve pro-green and pro-equity policy outcomes with a net social surplus. Adopting a qualitative methodology, this study conducts a structured literature search and subsequent document analysis, using advanced text mining techniques to extract, contextualise and map policy-relevant themes by geopolitical scope, policy intent and outcomes. Literature evidence confirmed that the ASEAN Member States have recognised and acknowledged the urgency of climate change and inequality challenges, and that these governments intervene at the local policy level and also engage in multilateral discussions, which lack, however, formal commitment and transparency. This study could not produce literature evidence of a systematic approach by these governments internalising mitigation mechanisms into the fiscal policy frameworks to achieve the aspired inclusive and sustainable outcomes - by design, rather than discretionary policy add-ons - and thus, the hypothesis was rejected.
Sustainable fiscal policy, inclusive growth, climate change mitigation, policy integration, multilateral intervention, document analysis.
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Panagiotis Kotsios
Correspondence: Panagiotis Kotsios, panagiotiskotsios@gmail.com
Economist PhD, MA, MSc, BA, Greece
pdf (467.14 Kb) | doi: https://doi.org/10.47260/bae/9211
The goal of this research was to measure income inequality and the distribution of the tax burden in Greece, by using open tax data released by the Greek Independent Authority of Public Revenues. The findings reveal multiple distortions in the disperse of tax burden among taxpayers’ income groups, along with very high income inequality among the population. The calculated Gini coefficient and S80/S20 ratio were found to be considerably higher than any previous measurements performed by international organizations and European statistical authorities through household surveys. The findings indicate an urgent need for an income and tax policy overhaul in the country, while the methodology that was used in the research can be replicated in other countries.
Tax, Income inequality, Greece, Gini coefficient.
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Sheng-Yeh, Wu, Guan-Ru, Chen and Ilia, Tetin
Correspondence: Guan-Ru, Chen, dionysiac@isu.edu.tw
International Finance Department, I-Shou University, Taiwan.
pdf (467.14 Kb) | doi: https://doi.org/10.47260/bae/9210
This study provides a theoretic framework for price promotions on seasonal events and popular events, such as anniversary, Christmas, and World Soccer Cup. Firms engage in collective price promotions seems to contradict economic wisdom because promotions are less likely to stand out among competitors in popular events. In a rational expectations model, this study shows all players’ performance improve in the equilibrium. Furthermore, even less-famous goods benefit from collective price promotions in which the theoretic framework can provide a guideline to manufacturers and retailers.
Event Promotions, Price-Quality Relationship, Advertising.
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Hiroaki Sakurai
Correspondence: Hiroaki Sakurai, hiroaki.sakurai@gakushuin.ac.jp
Faculty of Intercultural Studies, Gakushuin Women’s College
pdf (467.14 Kb) | doi: https://doi.org/10.47260/bae/929
This study examines whether foreign aid from 1986 to 2019 caused the Dutch disease effect in Vietnam using a VAR model and Granger causality test. In this context, “Dutch disease” refers to the weakening of manufacturing processes as a consequence of the appreciation of a local currency due to capital inflow. Since foreign aid is considered a type of capital inflow, it is among the reasons for the appreciation of a local currency, which may offset the impact of foreign aid on economic growth. Although Vietnam experienced rapid economic growth, along with a large amount of foreign aid and appreciation in the real exchange rate, after Doi Moi (economic reform) in 1986, few studies have yet been conducted. The estimation results show that foreign aid does not cause an appreciation of the local currency in Vietnam. Based on this result, the Dutch disease did not occur due to foreign aid in Vietnam.
Foreign Aid, Dutch Disease, Vietnam.
Burke, P.J. and F.Z. Ahmadi-Esfahani (2006). Aid and growth: A study of South East Asia. Journal of Asian Economics 17(2), 350-362.Burnside, C. and D. Dollar (2000). Aid, policies, and growth. American Economic Review 90(4), 847-868.Corden, W.M. and J.P. Neary (1982). Booming sector and de-industrialisation in a small open economy. Economic Journal 92(368), 825-848.Dalgaard, C., H. Hansen, and F. Tarp (2004). On the empirics of foreign aid and growth. Economic Journal 114(496), F191-F216.Darvas, Z. (2012). Real Effective Exchange Rates for 178 Countries: A New Database. Working Paper 2012/06, Brugel.Darvas, Z. (2021). Timely Measurement of Real Effective Exchange Rates” Working Paper 15/2021, Brugel.Dufrenot, J. G. and B.E. Yehoue (2005). Real exchange rate misalignment: A panel co-integration and common factor analysis. IMF working paper, WP/05/164.Easterly, W., R. Levine, and D. Roodman (2004). Aid, Policies, and Growth: Comment. American Economic Review 94(3), 774-780.Easterly, W. (2007). Was development assistance a mistake? American Economic Review 97(2), 328-332.Elbadawi, I.A., L. Kaltani, and K. Schmidt-Hebbel (2008). Foreign aid, the real exchange rate, and economic growth in the aftermath of Civil Wars. World Bank Economic Review 22(1), 113-140.Fielding, D. (2010). Aid and Dutch disease in the South Pacific and in other small island states. Journal of Development Studies 46(5), 918-940.Fielding, D. and F. Gibson (2013). Aid and Dutch disease in Sub-Saharan Africa. Journal of African Economies 22(1), 1-21.Godfrey, M. Sophal, C., Kato, T., Piseth, L. V., Dorina, P., Saravy, T., Savora, T., and S. Sovannarith (2002). Technical Assistance and Capacity Development in an Aid-dependent Economy: The Experience of Cambodia. World Development 30(3), 355-373.Hansen, H. and F. Tarp (2001). Aid and growth regressions. Journal of Development Economics 64(2), 547-570.Nilar, Taguchi, H., and H. Sakurai (2016). Does foreign aid cause “Dutch disease”?: Case of Cambodia, Lao PDR, Myanmar and Vietnam. Journal of Reviews on Global Economics 5, 180-189.Rajan, R.G. and A. Subramanian (2011). Aid, Dutch disease, and manufacturing growth. Journal of Development Economics 94(1), 106-118.Reisinezhad, A. (2020). The Dutch Disease Revised: Theory and Evidence. Halshs-03012647.Sakurai, H. (2017). Foreign aid and Dutch disease in Thailand. Bulletin of Applied Economics 4(2), 57-64.Tekin, R.B. (2012). Development aid, openness to trade and economic growth in least developed countries: bootstrap panel Granger causality analysis. Procedia - Social and Behavioral Sciences 62, 716-721.
Yasue Hakata
Correspondence: Yasue Hakata, hakata@u-gakugei.ac.jp
Department of Economics, Tokyo Gakugei University, Tokyo, Japan
pdf (467.14 Kb) | doi: https://doi.org/10.47260/bae/928
This study provides evidence that under the Japanese local individual income tax system, individuals smooth their after-tax income by choosing the timing of their tax payments. We construct a monthly data set of Japanese local taxes with sample periods for over 26 years. The results show that though the tax amounts are pre-determined in one-year units by the system, individuals pay more taxes during months when their incomes are high, such as in “bonus” periods, than other months in a year. The t-statistics for means indicates that there exist significant upward deviations during these months.
Consumption smoothing; Local income tax; Inter-temporal decision making; Mean test; Levene test.
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Chih-Hsiung Chang
Correspondence: Chih-Hsiung Chang, simon5289@gmail.com
Department of Finance, I Shou University
pdf (467.14 Kb) | doi: https://doi.org/10.47260/bae/927
Following the Asian Financial Crisis, South Korea, Hong Kong, and Taiwan experienced card debt crisis in 2001, 2002 and 2005, respectively. Various countries have studied and tried to find the factors that lead to the card debt crisis, hoping that the proposed countermeasures can effectively solve the problem. However, these are only practical operations and observations. Therefore, through information asymmetry, this article constructs a model of card debt crisis from adverse selection and moral hazard, and theoretically provides the government or competent authority with a policy basis. This article employs document analysis, combined with qualitative and quantitative data, to test the research hypotheses. The verification result is supported regardless of hypotheses tests for adverse selection, or moral hazard and confirms that information asymmetry and market failure do exist in the Taiwan credit card market. The policy implication of the article is that the government or competent authority should stop the illusion of free market mechanism and have to be responsible for employing countermeasures to face the crisis.
Card debt crisis, Information asymmetry, Adverse selection, Moral hazard , Document analysis, Market failure.
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Hsiang-Hsi Liu and Chien-Kuo Tseng
Correspondence: Hsiang-Hsi Liu, hsiang@mail.ntpu.edu.tw
Distinguished Professor, Graduate Institute of International Business, National Taipei University, Taiwan.
pdf (467.14 Kb) | doi: https://doi.org/10.47260/bae/926
Previous studies on co-integration focused on whether there is co-integration between variables, and might not explore which variables are caused when co-integration exists. This study is based on a multivariate factor model and apply Quah’s decomposition theorem to derive common factors affecting long-run equilibrium, and use this common factor to explain which variables affect the formation of co-integration. Empirically, five stock markets in the Asian-Pacific Chinese region (Hong Kong, Singapore, Taiwan and China including Shanghai and Shenzhen stock markets) are the objects of analysis. According to the estimated common factor, the existence of the co-integration among the five stock markets is caused by the stock markets in Taiwan and Hong Kong. Therefore, when investing in these five stock markets, investors must incorporate and use the information of the two stock markets as a decisive factor in order to promote correct decision-making. That is, the policy authorities of these countries should promote the effective interaction and operation of the stock market. The decisive influence of stock market information in the two countries cannot be ignored.
Co-integration, Error Correction Model (ECM), Common Component, Quah’s Decomposition Theorem.
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Steven Buigut and Burcu Kapar
Correspondence: Burcu Kapar, bkapar@aud.edu
School of Business Administration, American University in Dubai
pdf (467.14 Kb) | doi: https://doi.org/10.47260/bae/925
The COVID-19 pandemic continues to batter the world economy, strain the limited global health resources and dominate the world media. Even with the emergence of vaccines, there is still a substantial level of uncertainty. The study analyses the effects of COVID-19 incidence, government intervention and level of development on media coverage, and investor sentiments. The study uses daily data from the Ravenpack finance for the period January 2020 to November 2020 for 75 countries. The results show that NPIs increase the media attention, increase panic and depress market sentiment. Furthermore, higher number of COVID-19 cases and deaths affect promote panic and depress sentiment. We also show that a higher human development index increases media coverage, and depresses the sentiment, while a higher level of digital adoption reduces panic and depresses the market sentiment.
COVID-19, Ravenpack Indices, Media Attention, Stringency Index.
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Roko Pedisic
Correspondence: Roko Pedisic, roko.pedisic@srb.europa.eu
Single Resolution Board
pdf (467.14 Kb) | doi: https://doi.org/10.47260/bae/924
The рurрose of this research was to examine cointegration relationships among the stock market indices before and after the global financial crisis. The cointegration effects were analysed also in the context of the COVID-19 pandemic. The sample included 20 years of data at daily, weekly, and monthly frequencies for stock рrice indices in the United States (S&Р 500), Europe (STXE 600), Japan (Nikkei 225), China (SSE composite), Australia (S&P/ASX 200), and Brazil (IBOVESPA). Two interesting empirical facts were documented. First, the global financial crisis does not seem to have played a significant and uniform role in influencing the cointegration relationship, as only for the monthly sample the number of cointegrating relationships changed after the crisis. Second, the daily sample allowed to explore the period during the COVID-19 pandemic. The findings suggest that this event increased the number of cointegrating relationships, perhaps due to the global nature of such phenomenon which affects both developed and emerging economies contemporaneously. On the other hand, the financial crisis affected mainly developed economies, and the spillovers to emerging markets took place at a later stage as a second-round effect. In line with the previous findings in the existing literature, the results of the study have shown that cointegration stock market indices is dependent on the period of analysis and the frequency of the data.
Cointegration analysis, stock markets, financial crisis, COVID-19.
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