Interdependence of Income between China and ASEAN-5 Countries

This paper examines the interdependence of income between China and ASEAN-5 countries by resorting to the time series econometrics analysis from 1960 to 2000 of the real Gross Domestic Product (GDP). Empirical results are found to support the strong interdependence of income between China and ASEAN-5 countries. With the increasing interest of economic integration around the globe especially the proposed China-ASEAN Free Trade Area (CAFTA), the interdependence and synchronization movements of income between member countries is an important characteristic for suitability toward the regional common currency goal.

Managing Growth: The Role of Export, Inflation and Investment in three ASEAN Neighboring Countries

This study investigates the relationship between export, inflation, investment and economic growth for three ASEAN countries namely Indonesia, Malaysia, and Thailand. In general, the results revealed that export has a positive impact on growth. As for, Malaysia and Thailand, inflation has a negative impact on growth; while for Indonesia it has a positive impact. The inflation rate for Indonesia is almost consistent for a several years, which have lead to a positive relationship between inflation and growth. However, there is also a modest increase in the rate of inflation for certain years. The results also shows that investment have a positive impact on growth for Indonesia, Malaysia and Thailand.Economic growth; export; inflation; investment; ASEAN

FINANCIAL AND CURRENT ACCOUNT INTERRELATIONSHIP: AN EMPIRICAL TEST

Theoretically, financial account (FA) serves as a means of financing deficit in a country’s current account (CA). With the outburst of the rapid globalization and the liberalization of the capital markets, the function of FA could be a major cause of CA instability. This study empirically investigates the interrelationship between CA and the components of FA for the four crisis-affected Asian countries of Indonesia, Korea, the Philippines and Thailand. Empirical results show that deficit in CA mirror the surplus in FA supporting the theoretical foundation of balance of payment (BOP). We observed CA Granger causes FA suggesting that CA can be used as the control policy variable for the flows of capital in these countries. Therefore, the innovation of CA (whether deficit or surplus) would be important information for the liberalization and globalization of FA.current account, financial account, Asian, causality

Twin deficits in Cambodia: An Empirical Study

This study examines the inter-linkages between Government budget balance, and external balance for a transition economy in South East Asia – Cambodia. The empirical results of the quarterly data between 1996 and 2006, support twin deficits hypothesis that is the budget deficits do cause external deficits, in the short run. These two macroeconomics variables are moving together in the long run. For implication, these findings provide an insight for the Cambodia''s policy design and formulation.Budget Deficits Cambodia Current Account Deficit Unit Root Tests

Twin deficits in Cambodia: Are there Reasons for Concern? An Empirical Study

This study examines the inter-linkages between Government budget balance, and external balance for a transition economy in South East Asia – Cambodia. The empirical results of the quarterly data between 1996 and 2006, support twin deficits hypothesis that is the budget deficits do cause external deficits, in the short run. These two macroeconomics variables are moving together in the long run. For implication, these findings provide an insight for the Cambodia’s policy design and formulation.Budget Deficits; Cambodia; Current Account Deficit; Unit Root Tests

AN EMPIRICAL INVESTIGATION ON THE SUSTAINABILITY OF BALANCING ITEM OF BALANCE OF PAYMENT ACCOUNTS FOR OIC MEMBER COUNTRIES

This study aims to examine the sustainability of balancing item (???net errors and omissions') of balance of payment accounts for OIC (Organisation of the Islamic Conference) member countries. The series specific panel unit root test (SURADF unit root tests) suggest that 9 out of 23 sampled OIC member countries have their balancing item sustainable - Albania, Coted???Ivoire, Indonesia, Kuwait, Malaysia, Mozambique, Pakistan, Tunisia, and Uganda.Balancing Item (Net Errors and Omissions); Organisation of the Islamic Conference (OIC); Sustainability

Structural breaks and the twin deficits hypothesis: Evidence from East Asian countries

In this paper, we examine the relevance of the twin deficits hypothesis (TDH) for selected East Asian countries. Empirical results reveal that the admission of regime shifts substantially influences the conclusion that TDH exists in four out of the seven countries that we have investigated. It seems that TDH are less likely to be evident in countries with highly developed financial systems (Singapore and Japan).Current account, Budget deficit, Twin deficits hypothesis, Regime shift, Asian countries

Interdependence of Income between China and ASEAN-5 Countries

This paper examines the interdependence of income between China and ASEAN-5 countries by resorting to the time series econometrics analysis from 1960 to 2000 of the real Gross Domestic Product (GDP). Empirical results are found to support the strong interdependence of income between China and ASEAN-5 countries. With the increasing interest of economic integration around the globe especially the proposed China-ASEAN Free Trade Area (CAFTA), the interdependence and synchronization movements of income between member countries is an important characteristic for suitability toward the regional common currency goal.interdependence; cointegration; China; ASEAN-5

General Equilibrium Perception on Twin Deficits Hypothesis: An Empirical Evidence for the U.S.

From the general equilibrium perceptive, this study proposes the inclusion of private savings and investments in examining twin deficits hypothesis. Using U.S. data, the empirical results support twin deficits hypothesis but the budget deficit’s elasticity is decreasing from unity to 0.43.General Equilibrium; Government Budget Deficits; Current Account Balance; U.S.

Testing Twin Deficits Hypothesis: Using VARs and Variance Decomposition

This paper examines the twin deficits hypothesis in Indonesia, Malaysia, the Philippines and Thailand (ASEAN-4 countries). The major findings of this paper are: (1) Long run relationships are detected between budget and current account deficits. (2) We found that the Keynesian reasoning fits well for Thailand since a unidirectional relationship exists which runs from budget deficit to current account deficit. For Indonesia the reverse causation (current account targeting) is detected while the empirical results indicate that a bidirectional pattern of causality exists for Malaysia and the Philippines. (3) We also found support for an indirect causal relationship that runs from budget deficit to higher interest rates, and higher interest rates lead to the appreciation of the exchange rate and this leads to the widening of current account deficit. (4) The results of the variance decompositions and impulse response functions suggest that the consequences of large budget and current account deficits become noticeable only over the long run.Twin deficits, Cointegration, Variance Decomposition