Yen Synchronization and Maastricht Convergence among the ASEAN-5, Japan and Korea

In this thesis, the main objective is to investigate whether ASEAN-5+2 countries meet the conditions for creating an AMU with the yen as the currency unit. First, the results of BEKK-GARCH (1, 1) and the dynamic correlation coefficients show that only Singapore, Korea, and Thailand have the potential to adopt the yen as the regional currency unit. Second, the Maastricht criteria only have a significant impact on real GDP per capita growth for Japan, Korea, Singapore and the Philippines in the long term. In addition, the Maastricht criteria show that there were symmetry impacts on the growth of real GDP per capita for Japan, Korea, Singapore and the Philippines. Thus, only these four out of the seven countries (Japan, Korea, Singapore and the Philippines) appear to be potential candidates for establishing the AMU. Overall, the findings do not suggest the possibility of a formation of a full-fledged AMU by the ASEAN-5+2 countries. However, the formation of a sub-grouping of a few of the countries in the ASEAN-5+2 is more feasible, that is Japan, Singapore, and Korea. This is because these countries have higher institutional quality and fulfill the Maastricht treaty as well as being close in exchange rate regimes, and also have symmetrical economic behavior

Financial social accounting matrix: concepts, constructions and theoretical framework

A Social Accounting Matrix (hereafter, SAM) is a particular tool to represent that whole economic activities incomes and expenditures flows accounts through a socio-economic system, which captures the transactions and transfers between all economic agents and institutions in the system. During the last two decades, the financial market are well developed and significantly impacts the economic growth, it will be more worthy to move from a real SAM to a Financial SAM, containing the details of the financial institutions and transaction of agents’ assets and liabilities. Therefore, this paper will discuss the outlines and constructions framework for the aggregate Financial SAM. The understanding of the structure of Financial SAM can be a database for a financial Computed General Equilibrium (CGE) model and can be used to analyze the behavior of national’s public debt.SOCIAL ACCOUNTING MATRIX (SAM), FINANCIAL, FLOW-OF-FUNDS

Impact of crude oil price, exchange rates and real GDP on Malaysia's food price fluctuations: symmetric or asymmetric?

In this study, we examined the impact of crude oil price, real GDP, and exchange rates on Malaysian food price fluctuation by using the quarterly data from quarter 1 of year 2000 to quarter 2 of year 2016. Considering the possibility that an asymmetric impact exists between the underlying variables, an asymmetric Unrestricted Non-linear Auto-Regressive Distributed Lag (NARDL) model was adopted. In short, the bounds test for cointegration showed that the underlying variables have a significant long-run relationship along with changes in food prices. However, only the crude oil price has a symmetric long-run effect on the food price fluctuation. On the other hand, the real GDP and exchange rates have an asymmetric long-run effect on food price movements. In the short-run, the crude oil price has an insignificant impact on food price volatility, but the growth of real GDP and exchange rates have a significant impact on food price changes. Hence, this study suggests that policymakers should be taking the exchange rate factor instead of crude oil price into consideration

Impact of climate change and economic factors on Malaysian food price

This paper is motivated by the increasing food price over the recent years (2010 – 2017) in Malaysia. Food is a necessity for mankind and everyone has equal rights to enjoy adequate food protecting from hunger and malnutrition. In general, we understand that food and agriculture production are highly related. Crop production is affected biophysically by climatic variables, i.e. suitable rainfall and temperature for photosynthesis process to take place. If these climatic variables alter extremely in a long-term period, crop production will be affected and crop damage can occur due to the climate change effect such as extreme flood and drought. Hence, if climate change effect is defined as a linear relationship, it will result in a misleading explanation whereby as long as rainfall and temperature increase (or decrease) it will cause the crop production to decrease (or increase). Given the problem associated with food price, this paper investigated the food price determinants by looking at both economic factors and climate change. Non-linear time series analysis namely Engle-Granger (EG) cointegration test and Error Correction Mechanism (ECM) were performed by including the determinants such as Carbon Dioxide (CO2), crude oil price, exchange rate and real gross domestic product (RGDP). The results showed that both economic Real Gross Domestic Product and climate factors jointly affect food price significantly and climate factor (CO2) exhibits a strong non-linear U-shaped impact on food price in the long run. In addition, the Error Correction Term (ECT) showed that food market will have a slower self-recovery mechanism to adjust and return the temporary food market demand-supply shock to the equilibrium

Yen synchronization among ASEAN-5, Korea and Japan: evidence from the multivariate GARCH model

In this study, we aim to investigate whether ASEAN-5 and the Korean currency regimes are ready to use Japanese Yen as an Asian future Exchange Rate Mechanism (AERM) by using Multivariate GARCH models. Overall findings show that Singapore, Thailand, and Korea are the potential countries that ready to adopt Japanese Yen as an AERM. However, Malaysian Ringgit, Indonesian Rupiah and the Philippines Peso are weakly correlated with Japanese Yen. This indicates that the East Asian free trade agreement such as ASEAN-10+3 and EAFTA does not enough to promote these low dynamic correlation countries (Malaysia, Indonesia, and the Philippines). Perhaps, the appropriate way to begin the AERM is to form a group of currency system which highly correlated with Japanese Yen (e.g. Singapore, Thailand, and Korea) whiles others could have a commitment to adopt Japanese Yen as a regional trade-invoicing currency in order to increase the level of Yen synchronization correlation

Malaysia’s Agricultural Production Dropped and the Impact of Climate Change: Applying and Extending the Theory of Cobb Douglas Production

Under climate change, Malaysia's agricultural production showed decreasing in recent decades. This study tries to fill in the gaps to applying and extending the Cobb Douglas production function theory to examine the impact of climate change and economic factors on Malaysia's agricultural production. Using Engle-Granger (EG) test with 37 years of data from 1980 to 2016. The findings showed that the long-run estimated coefficients for rainfall, temperature, and interest rate were -0.338, -0.024, and -0.029, respectively. This indicates that each additional percent in rainfall, temperature, and interest rate will be affected the agricultural production, on average, to decrease by 0.338%, 0.024%, and 0.029%, respectively, holding others constant. Besides that, the long-run elasticity of real GDP per capita, employment, and Trend showed 0.509, 0.513, and 0.119, respectively. Increase 1% of real GDP per capita will lead to the agricultural production to increase about 0.509%, ceteris paribus. The elasticity of employment showed that each 10% increase in agricultural employment will increase the agricultural production on average 5.13%, ceteris paribus. Furthermore, the trend estimated coefficient showed that the agricultural production will have a constant growth rate which is 0.119% per year. All variables were statistically significant to explain the long-run agricultural production. The short-run rainfall, temperature, employment, and Trend were statistically significant to determine the short-run production growth. Therefore, advanced technology and the latest information on climate change are relevant to boost agricultural production growth. In addition, policymakers also suggested establishing lower interest rate loan facilities and no labor shortage in this industry

Selected Factors Influencing China's Palm Oil Import Demand from Malaysia

The export of palm oil from Malaysia to China has declined since 2013, although the Malaysian Ringgit has depreciated. The Malaysian palm oil market has also struggled against the Indonesian palm oil and soy oil in China. Hence, this study aimed to identify the significant factors influencing China's demand for Malaysian palm oil by adopting the Auto-Regressive Distributed Lag (ARDL) analysis. The finding revealed that the currency rate of exchange, the foreign trade price of Malaysian palm oil to China, and the international soy oil price significantly influence Malaysian palm oil demand in China. Nevertheless, China's real GDP per capita showed a positive and significant influence only in the long run. The demand for Malaysian palm oil in China was not significantly impacted by the palm oil price offered by Indonesia, neither in the long run nor short run. Thus, the authorities related to this industry need to strategize the stock management system to control the price and currency stabilization to maintain its competitive power

Sustaining paddy self-sufficiency and land demands in Sabah, Malaysia: a structural paddy and rice econometric model analysis

The objective of this study is to construct an econometric commodity model in order to forecast the long term rice production performance of the state of Sabah, Malaysia. The baseline projection shows that the Sabah rice self-sufficiency is estimated to achieve approximately 38% in the next 10 years due to the scarcity of the suitable land bank allocate for paddy cultivation. In order to achieve 60% of targeted rice self-sufficiency level (SSL), the size of land for paddy cultivation must be increased in Sabah. Based on the scenario simulation projection result, the expansion of paddy cultivation area will contribute a positively to the industrial rice production and consequently achieving the expected 60% of SSL by the end of 2024. In a nutshell, the state government of Sabah possess state autonomy on the land management, thus the state government plays a significant key role on promoting the local rice self-sufficiency level in the long-term period

Financial Social Accounting Matrix: Concepts, Constructions and Theoretical Framework

A Social Accounting Matrix (hereafter, SAM) is a particular tool to represent that whole economic activities incomes and expenditures flows accounts through a socio-economic system, which captures the transactions and transfers between all economic agents and institutions in the system. During the last two decades, the financial market are well developed and significantly impacts the economic growth, it will be more worthy to move from a real SAM to a Financial SAM, containing the details of the financial institutions and transaction of agents’ assets and liabilities. Therefore, this paper will discuss the outlines and constructions framework for the aggregate Financial SAM. The understanding of the structure of Financial SAM can be a database for a financial Computed General Equilibrium (CGE) model and can be used to analyze the behavior of national’s public debt