Gulasekaran Rajaguru

Is there an export or import-led productivity growth in rapidly developing Asian countries? a multivariate VAR analysis

In contrast to cross-country studies, the paper investigates the relationships between trade and labour productivity for nine rapidly developing Asian countries in a time-series framework using a vector error-correction model. Independent tests on the long-run and short-run relationship between trade variables of exports and imports and productivity are conducted. The results suggest that trade has an important impact on productivity and output growth in the economy, however it is imports that provide the important ‘virtuous’ link between trade and output growth. The results indicate that exports and imports have qualitatively different impacts on labour productivity. The long-run result shows that there is no causal effect from exports to labour productivity growth for Hong Kong, Indonesia, Japan, Taiwan and Thailand; thereby suggesting that there is no export-led productivity growth in these countries. However, significant causal effects were found from imports to productivity growth, suggesting import-led productivity growth in India, Indonesia, Malaysia, Philippines, Singapore and Taiwan. In addition, the results indicate that imports tend to have greater positive impact on productivity growth in the long run.

Exchange-rate volatility, trade and "fixing for life" in Thailand

Abstract At the outset of the 1997 financial crisis, the quest to find a more suitable exchange-rate policy has become an urgent task facing the East Asian economies. One of the key policies agreed under Thailand’s August 1997 Letter of Intent (LOI) with the IMF was the adoption of a more flexible exchange-rate policy. However, the country re-adopted its pre-1997 crisis rigid exchange-rate policy in early 1999. To grasp this “fixing for your life” phenomenon, we test the impact of the exchange-rate volatilities of Thailand’s baht against the yen and the US dollar on the performance of the country’s bilateral trades with the two key partners.

Does Small Store Location Matter? A Test of Three Classic Theories of Retail Location

Abstract Just how important is physical location as a source of small-firm advantage? In this paper we consider this question by testing the predictive validity of three classic perspectives: central-place theory, spatial interaction theory and the principle of minimum differentiation. In addition, we identify and test two managergrounded hypotheses focusing on locational continuity and transactional convenience. We test these hypotheses on a sample of small U.S. retail hardware stores and find significant support for central-place theory and both manager-grounded hypotheses.

The Long-run Determinants of Australian Income Inequality

Recent interest has been stimulated by the growth of income inequality in most developed countries during the 1980s and 1990s. However, considerable uncertainty still exists as to which factors have been the most important causes of this development. This article uses a measure of income inequality derived from taxation statistics and a recently proposed method for testing long-run Granger non-causality to examine the key determinants of Australias inequality for the years 1970–2001. In line with popular concern, we find that globalisation and technological progress – defined as the global flow of information – has increased income inequality. In contrast, improved terms of trade have been equity-enhancing. Of the institutional determinants, de-unionisation has had an adverse effect on income inequality, whereas higher minimum wages have reduced it.

The Chicken or the Egg? The Trade-Off between Bank Fee Income and Net Interest Margins

This study considers the time series relationship between bank fee income and bank net interest margins in Australia, applying panel vector autoregressions to a unique, hand-collected dataset. Increases in bank fee income are being used to supplement decreases in net interest margins. The increase in magnitude of fee income associated with reductions in margin income is smaller than the decrease in net interest margins, resulting in a net wealth transfer favouring users of bank services; although not all users of bank services gained and/or gained equally. The overall increase in fee income is marginally greater that the reduction in margin income. It is argued that banks have responded to falling margin revenue by increasing their range of fee-based services, especially insurance. Increases in fee income are found to pre-date declines in margin income, thus Australian banks were pro-active in the process of disintermediation. JEL Classifications: G21, G11, C33

Investigating the determinants of domestic bonds: The role of socio-economic and institutional factors

ABSTRACT This article investigates the determinants of the size of domestic bond market using economic, social and institutional factors. We expand the body of existing literature by suggesting that economic and social environment as well as institutional settings vary between developed and emerging economies. The article uses recent data from a wide range of countries, incorporates a variety of macroeconomic variables, social indicators and institutional factors to reassess the determinant of domestic bond markets. Robustness of the empirical analysis is established through both two-stage least squares and generalized method of movements techniques. The results of this article show that the size of the economy, breadth and depth of the banking system, the monetary policy stance, the degree of openness, the level of corruption, the degree of civil liberty and status of market access to investors, all play a crucial role in the determination of the size of the domestic bond market. We also find differences across developed and emerging market samples. The results are robust to different specifications and the corresponding estimation techniques.

It's Not Yen, Euro or Koala Bloc: Greenback is Still Dominant in East Asia

Given the nature of East Asia’s economic structure, interregional exchange rate stability is an essential requirement for regional economic integration. One way to achieve exchange rate stability is for the region to adopt an anchor currency. However, the choice of a potential anchor is an important question for policy planners. This paper examines the role of 5 major currencies as candidates for an anchor currency in the East Asian region. In particular, the paper examines the dynamic linkages between a selected sample of East Asian currencies with each potential anchor currency, the Australian dollar, Japanese yen, euro, US dollar and Chinese renminbi. Utilizing a recently developed test procedure which distinguishes the long-run Granger non-causality from that in the short-run, this paper does not find any support to the much debated emergence of a yen bloc, euro bloc, or koala bloc. The empirical evidence brought forward in this paper suggests that the US dollar is still a dominant currency in the East Asian region.

International migration and the welfare state: Asian perspectives

Immigration is a controversial topic in Australia and some of its Asian neighbours. Given the potential impact on native welfare, such as effects on relative wages and unemployment, there has been political mobilisation on the immigration question. The presence of a redistributive welfare state in all major immigrant host countries creates yet another margin on which immigration affects native welfare. The focus of the paper is whether a large intake of immigrants leads to a reduction in welfare state effort. It is often argued that steady increases in immigration lead to public pressure for stricter immigration controls or for less generous publicly funded social expenditures. In terms of immigrants with similar employability and claims on the public purse to natives, it is hypothesised that the impact on welfare spending is neutral. These ideas are tested using detailed data for migration to developed countries.

Has globalization increased Australian inequality

1: Facing up to the hurdle race - Jenny Corbett, Anne Daly, and Dehne Taylor Section 1: State of the economy since 1990 and implications for labour markets 2: Australias changing labour market - Dehne Taylor 3: Economic recession and changes in wages of part-time employees in Japan - Tomoko Kishi 4: The changing distribution of working hours in Australia - Mark Wooden and Robert Drago Section 2: Trade and the labour markets 5: Has globalisation increased Australian inequality? - Noel Gaston and Gulasekaran Rajaguru 6: Imports, production, and the Australian worker - Christis G. Tombazos Section 3: Earnings and income distribution 7: A rising tide? Income inequality, the social safety net and the labour market in Australia - Ann Harding, Quoc Ngu Vu and Alicia Payne 8: The changing role of skill, wages, employment and education in the Japanese labour market, 1985-2005 - Hisako Ishii Section 4: Population aging and migration 9: Labour force participation of older workers in Australia and Japan: a tale of two pension systems - Hazel Bateman and John Piggott 10: Australias skilled migration program and skilled migration between Australia and Japan - Dharmalingam Arunachalam and Ernest Healy 11: Ageing, migration, and female workers in Japan - Junichi Goto Section 5: Youth and women 12: Changing transitions: developments in the labour market and education for Australian youth since the 1980s - Anne Daly and Kenneth Cole 13: Equal employment opportunity, work-life balance and corporate performance in Japan: an analysis based on matched employer-manager-employee data - Akira Kawaguchi