Identifying the Signs of Currency Speculation in Hong Kong's Linked exchange Rate

This paper identifies the ex ante factors of currency speculation based on the experience of Hong Kong’s three episodes in 1988, 1998 and 2007. The dynamic conditional correlation models are used to study the inter-temporal interactions among the Hang Seng Index, Hang Seng Index futures and exchange rate difference. The logistic model is applied to study the probability of currency speculation. The empirical results indicate that unusual movements in the exchange rate difference, Hang Seng Index premium and open interest of futures contracts can be found in the period prior to and during currency speculations. In addition, the conditional correlation between stock market and exchange rate market declined sharply during the periods of currency speculation. The paper traces the disposition of the speculators.Currency speculation, linked exchange rate, Hong Kong

China's Capital and Productivity Measurement Using Financial Resources

This paper constructs China's capital stock, which is used in conjunction with a labor variable to estimate a Cobb-Douglas production function for the Chinese economy. Two panels of data are used one for capital formation and one for sources of investment finance. Both national and provincial data are used for these two panels, thus giving a total of four capital-stock series. The Cobb-Douglas estimates show that China's total factor productivity was about 3.4 percent in the post-reform years. Productivity of coastal provinces is higher than inner provinces. Among the various sources of investment finance, foreign direct investment is more efficient than state-funded capital stock.China economic reform; provincial growth and productivity; financial resources

The Optimal Level and Impact of Internal Factors on Growth

This paper empirically uses data from the world economy to show that performance of domestic factors are equally important to external factors when comes to growth. Various external and domestic factors are used to construct two separate indices and the principal component method is applied in the analysis. The empirical results show that given a different level of performance in the economy’s external factors, a higher performance in the internal factors will produce a higher growth rate. When the performance of an economy’s internal factors is extremely low, it would be appropriate for that economy first to improve its internal factors.Growth, external factors, domestic factors

Analyzing the Kuznets Relationship using Nonparametric and Semiparametric Methods

This paper studies the income inequality and economic development relationship by using unbalanced panel data of OECD and non-OECD countries for the period 1962 - 2003. The nonparametric estimation results show that income inequality in OECD countries are almost on the backside of the inverted-U relationship, while non-OECD countries are approximately on the foreside, except that the relationship in both country groups shows an upturn at a high level of development. Development has an indirect effect on inequality through control variables, but the modes are different in the two country groups. The model specification tests show that the relationship is not necessarily captured by the conventional quadratic function. The cubic and fourth-degree polynomials, respectively, fit the OECD and non-OECD country groups best. The finding is robust regardless whether the specification uses control variables. Development plays a dominant role in mitigating inequality.Kuznets inverted-U; Nonparametric and semiparametric models; Unbalanced panel data