Michaël Goujon

The transactions demand for money in the presence of currency substitution: evidence from Vietnam

Currency substitution – the use of foreign money to finance transactions between domestic residents – is widespread in low income and transition economies. Traditionally, however, empirical models of the demand for money tend to concentrate on the portfolio motive for holding foreign currency, while maintaining the assumption that the income elasticity of demand for domestic money is invariant to the degree of currency substitution. A simple re-specification of the demand for money is offered which more accurately reflects the process of currency substitution by allowing for a variable income elasticity of demand for domestic money. This specification is estimated for Vietnam in the 1990s. Using a standard cointegration framework evidence is found for currency substitution only in the long-run but well-defined wealth effects operating in the short-run.

Determinants of foreign direct investment in Vietnamese provinces: a spatial econometric analysis

This article uses spatial econometric models to explore the determinants of the distribution of foreign direct investment (FDI) inflows among Vietnamese provinces in the period after the Asian crisis. First tests reveal spatial autocorrelation in the OLS estimated errors, justifying the use of spatial error models estimated using the maximum likelihood estimator. Relations between FDI and its traditional determinants are surprisingly robust to the inclusion of spatial interdependence terms. Results show a dominance of the form of regional trade platform FDI, and of regional agglomeration effects. National and provincial economic policies are also found to be important factors for attracting FDI.

Has structural economic vulnerability decreased in Least Developed Countries? Lessons drawn from retrospective indices

Abstract The Economic Vulnerability Index (EVI) is a well-recognised measure of the structural vulnerability of developing countries and is regularly used and published by the United Nations for cross-country comparison purposes, primarily to review the list of Least Developed Countries (LDCs). However, due to the revisions in methodology occurring over time, the official EVI cannot be used to assess the changes in vulnerability. In this paper, we use two retrospective series of the EVI, based on constant definitions. The real change in vulnerability is thus isolated from the impact of revisions in the design of the index, allowing comparison of the evolution of LDCs and non-LDCs. The implications of the revisions in the EVI design are then discussed.

MEASURING MACROECONOMIC INSTABILITY: A CRITICAL SURVEY ILLUSTRATED WITH EXPORTS SERIES

For at least 40 years, the analysis of the causes and consequences of macroeconomic instability has greatly deepened our understanding of the handicaps faced by developing countries. This concern on economic instability is evidenced by a broad spectrum of indicators, based on the deviation of observed values of a given economic aggregate from its reference or trend value. In general, the choice of this or that indicator is not discussed advocating that the resulting instability indicators are closely correlated. Focusing on measurements of instability in export revenue data for 134 countries from 1970 to 2005, this paper finds that this assertion may be true for variance-based indicators, measuring the average magnitude of deviations from the trend. However, great discrepancies may arise between different measures of the asymmetry or of the occurrence of extreme deviations around the trend when different trend computation methods are used. Our purpose is, therefore, to invite further discussions regarding the use of these indicators, and to highlight the different dimensions of instability, which have been so far unheeded by the economic literature.

Measuring macroeconomic instability: a critical survey illustrated with exports series

For at least 40 years, the analysis of the causes and consequences of macroeconomic instability has greatly deepened our understanding of the handicaps faced by developing countries. This concern on economic instability is evidenced by a broad spectrum of indicators, based on the deviation of observed values of a given economic aggregate from its reference or trend value. In general, the choice of this or that indicator is not discussed advocating that the resulting instability indicators are closely correlated. Focusing on measurements of instability in export revenue data for 134 countries from 1970 to 2005, this paper finds that this assertion may be true for variance-based indicators, measuring the average magnitude of deviations from the trend. However, great discrepancies may arise between different measures of the asymmetry or of the occurrence of extreme deviations around the trend when different trend computation methods are used. Our purpose is, therefore, to invite further discussions regarding the use of these indicators, and to highlight the different dimensions of instability, which have been so far unheeded by the economic literature.

MEASURING MACROECONOMIC INSTABILITY: A CRITICAL SURVEY ILLUSTRATED WITH EXPORTS SERIES: MEASURING MACROECONOMIC INSTABILITY

For at least 40 years, the analysis of the causes and consequences of macroeconomic instability has greatly deepened our understanding of the handicaps faced by developing countries. This concern on economic instability is evidenced by a broad spectrum of indicators, based on the deviation of observed values of a given economic aggregate from its reference or trend value. In general, the choice of this or that indicator is not discussed advocating that the resulting instability indicators are closely correlated. Focusing on measurements of instability in export revenue data for 134 countries from 1970 to 2005, this paper finds that this assertion may be true for variance-based indicators, measuring the average magnitude of deviations from the trend. However, great discrepancies may arise between different measures of the asymmetry or of the occurrence of extreme deviations around the trend when different trend computation methods are used. Our purpose is, therefore, to invite further discussions regarding the use of these indicators, and to highlight the different dimensions of instability, which have been so far unheeded by the economic literature.