Inflation and Macroeconomic Effects of Inflation Targeting in Asia: Time-Series and Cross-Country Analysis

Controlling inflation is important. The 2008-2009 global financial crisis created new concerns about the macroeconomic effects of inflation targeting. A key issue for many central banks in recent years has been that inflation is uncomfortably too low rather than too high. This thesis examines the impact of inflation targeting on the behaviour of inflation, output growth and real exchange rates for eight Asian countries using time-series and panel data from 1987 to 2013. The econometric methodologies employed include panel GARCH, quantile unit root and Markov regime-switching testing. Panel GARCH results indicate that inflation targeting is more credible in lowering the inflation level rather than its volatility. The quantile unit root testing results indicate that the credibility of inflation targeting and alternative monetary policy frameworks in Asia are imperfect, except for Malaysia and South Korea. Results also suggest that targeting countries have been building up their monetary policy credibility more than non-targeting countries, based on a faster rate of decline in inflation rate changes. Results generally indicate the presence of mean-reversion at the lower quantiles only. Where stationarity is present, results indicate varied speed of adjustment process across quantiles. The regime-switching results indicate that inflation and output growth are generally characterized by partial stationarity, while there is mostly varied stationarity in real exchange rates. Results also indicate that inflation targeting significantly affects the inferred probabilities of remaining in the stationary regime, mainly for output growth and real exchange rates and for inflation in some cases. Results further indicate that the variance of inflation and output growth is lower during the inflation targeting period. Furthermore, results indicate that there is a significant difference between targeting and non-targeting countries in terms of the speed of adjustment of macroeconomic variables towards the equilibrium level and the behaviour of inferred probabilities of remaining in the stationary regime

The Russian invasion of Ukraine, fertilizer prices, and food security: Evidence from rice-producing economies in Asia

This study assesses the impact of increased fertilizer prices under different scenarios on rice production, consumption, trade and prices. Using a global rice model based on a partial equilibrium framework, the simulation results show that a 30% to 100% increase in fertilizer prices would reduce rice yields by 0.45% to 1.33%, but increase world rice prices by 7% to 23% between 2022 and 2025. As the world market price for rice increases significantly, rice trade and rice consumption will decrease accordingly, estimated at 1.7% to 7.0% and 0.27% to 0.78%, respectively. The simulation results also show that retail prices for rice would increase significantly in all rice-consuming countries. The impact of higher fertilizer prices would vary widely in the major rice-producing countries

Modeling the Effects of Exchange Rate Volatility on Thai Rice Exports

This paper investigates the effects of exchange rate volatility on the rice export flows of Thailand to its major trading partners namely South Africa, China, United States of America, Indonesia, Singapore and Japan for the period 2001:1−2012:12. We use a six-month moving sample standard deviation of the growth of the real exchange rate which is then tested in a model of Thai milled rice exports. Cointegration and error-correction models are used to obtain the estimates of the cointegrating relations and the short-run dynamics, respectively. The results obtained in this paper, on the whole, provide evidence that the real exchange rate volatility has a significant negative effect on the volume of Thai rice exports

Nonlinearities in Regional Rice Prices in the Philippines: Evidence from a Smooth Transition Autoregressive (STAR) Approach

This paper investigates nonlinear dynamics in monthly rice prices of 16 regions in the Philippines at three levels: farm gate, wholesale and retail, over the period of January 1990 to December 2012. We used a series of tests to investigate whether the regional prices are characterized by linear processes or non-linear smooth transition autoregressive (STAR)-type dynamics. Results indicate that STAR-type nonlinearity exists in several regions, and particularly for farm gate prices. The most common process is a logistic STAR dynamic characterizing an asymmetric price behavior determined by two regimes and a smooth switching process

Women's land title ownership and empowerment: Evidence from India

This paper examines how women's participation in family decision-making is affected by land rights in rural areas in India. The 2005 Hindu Succession Act was legislated to protect women's rights to an equal share in ancestral property, including land. Using a unique rural household survey from Eastern Uttar Pradesh, Bihar, Odisha, and West Bengal where female enumerators were employed to interview female participants, we find that only 3% of the 8,000 rural households randomly selected in those four states have their land registered under women's names. Controlling for the potential endogeneity of land title ownership, we find that women's land title ownership has positive effects on their participation in decisions about farming, livelihood, and household activities. Using state leveldisaggregated data, however, we find that the signs and magnitudes of the impacts differ across the four states whose social and economic norms are diverse

Ex Ante Impact Assessment of a Drought Tolerant Rice Variety in the Presence of Climate Change

Rice productivity and sustainability are continually threatened by abiotic stresses, particularly in the era of global climate change. In severe cases, 100% yield loss can be experienced due solely to abiotic stresses, such as drought. The situation may become worse due to climate change that may multiply the frequency and severity of such abiotic stresses. Hence, there is an urgent need to develop improved varieties that are more resilient to abiotic stresses. This study examines the net economic benefit and potential economic impacts of developing and disseminating a drought tolerant rice variety in South Asia. Drought is one of the most destructive abiotic stresses that not only causes major rice yield losses in South Asia, but also in other parts of Asia and Africa. Using the ORYZA2000 crop simulation model, we demonstrate that the new variety can provide yield gains in South Asia both when there is no change in the climate and also under the different climate scenarios projected by CGCM climate model. Moreover, our economic surplus analysis shows that the economic benefits from the successful development and dissemination of a drought tolerant variety more than outweigh the research investments needed to develop the variety. The partial equilibrium models we used also indicate that rice production is higher and rice prices are lower when a drought tolerant variety is adopted in South Asia (as compared to the case without this new variety). This in turn can lead to more sustainable rice production, improved food security, and better nutritional outcomes for the poor