Sandy Suardi

The Australian firearms buyback and its effect on gun deaths

The 1996-1997 National Firearms Agreement (NFA) in Australia introduced strict gun laws, primarily as a reaction to the mass shooting in Port Arthur, Tasmania, in 1996, where 35 people were killed. Despite the fact that several researchers using the same data have examined the impact of the NFA on firearm deaths, a consensus does not appear to have been reached. In this paper, we reanalyze the same data on firearm deaths used in previous research, using tests for unknown structural breaks as a means to identifying impacts of the NFA. The results of these tests suggest that the NFA did not have any large effects on reducing firearm homicide or suicide rates.

Are Empirical Measures of Macroeconomic Uncertainty Alike

There is a plethora of time series measures of uncertainty for inflation and real output growth in empirical studies but little is known whether they are comparable to the uncertainty measure reported by individual forecasters in the survey of professional forecasters. Are these two measures of uncertainty inherently distinct? This paper shows that, compared with many uncertainty proxies produced by time series models, the use of real‐time data with fixed‐sample recursive estimation of an asymmetric bivariate generalized autoregressive conditional heteroskedasticity model yields inflation uncertainty estimates which resemble the survey measure. There is, however, overwhelming evidence that many of the time series measures of growth uncertainty exceed the level of uncertainty obtained from survey measure. Our results highlight the relative merits of using different methods in modelling macroeconomic uncertainty which are useful for empirical researchers.

Minimum Wages and Employment: Reconsidering the Use of a Time-Series Approach as an Evaluation Tool

The time-series approach used in the minimum wage literature essentially aims to estimate a treatment effect of increasing the minimum wage. In this paper, we employ a novel approach based on aggregate time-series data that allows us to determine if minimum wage changes have significant effects on employment. This involves the use of tests for structural breaks as a device for identifying discontinuities in the data which potentially represent treatment effects. In an application based on Australian data, the tentative conclusion is that the introduction of minimum wage legislation in Australia in 1997 and subsequent minimum wage increases appear not to have had any significant negative employment effects for teenagers.

When the US sneezes the world catches cold: are worldwide stock markets stable?

There is a widespread belief that the US subprime mortgage crisis has escalated into a full-blown current global financial crisis and that many economies throughout the world have been hit by it. Using a test of financial market stability, this article shows the varying degree of impact system-wide shocks during the US subprime crisis had on developed and emerging market stock indices. There is evidence that some developed and stable markets display signs of financial fragility with systematic shocks being propagated differently during extreme and normal market conditions. In addition, the crisis increases the response of emerging market returns to systematic shocks during both tranquil and volatile regimes, albeit that the effects are more pronounced in Latin America than in Asian markets.

Markov-Switching Mean Reversion in Short-Term Interest Rates: Evidence from East Asian Economies

This paper employs a Markov-switching approach to model the dynamics of East Asian short rates. Regime changes are incorporated in standard unit root test to reveal periodic changes in the stationarity property of interest rates. There is evidence that three of the five short rates follow a random walk process in tranquil and low rates episodes but mean-revert in periods when rates are high and volatile. Singapore short rates are characterised by a random walk process, whereas the Philippines rates behave as a mean-reverting process in both regimes. Factors such as exchange rates, monetary policy and interest rate differentials vis-a-vis US interest rates influence the likelihood of short rates being in a volatile state. The regime switching dynamics of interest rates carry important implications for policy-makers. Copyright

Foreign Institutional Investment, Ownership, and Liquidity: Real and Informational Frictions

The literature widely documents the negative liquidity impact of foreign participation in firms that permit high foreign institutional ownership. This paper employs a unique setting for the limited participation of qualified foreign institutional investors (QFIIs) in Chinas A-share market and examines how this impacts on stock liquidity in emerging markets. Contrary to the findings in the literature, foreign investor participation helps enhance the liquidity of affected stocks by promoting trade activities and price discovery. The improvement in liquidity does not occur through the information friction channel, but rather the real friction channel. Our results are robust to endogeneity issue and the possible influence of the global financial crisis, industry effects and the stock exchange. Further, the liquidity improving effects of QFII are even stronger when the analysis is performed on a subsample of QFII firms.

THE BEHAVIOR OF U.S. PUBLIC DEBT AND DEFICITS DURING THE GLOBAL FINANCIAL CRISIS

In this paper we test the sustainability of U.S. public debt for the period 1916–2012 by analyzing how the primary surplus to gross domestic product (GDP) responds to changes in the debt to GDP ratio in a time‐varying parameter model. Further, we determine the stationarity property of the debt/GDP ratio while accommodating possible breaks in the data caused by wars and economic crisis under both the null and alternative hypotheses of an endogenous unit root test. The results show that the U.S. public debt was sustainable until 2005 when the primary surplus to GDP reacted negatively to the debt/income ratio. This is further exacerbated during the global financial crisis when primary surpluses continued to fall with increased debt, thus jeopardizing the sustainability of fiscal policy. While the stationarity test shows that the U.S. fiscal debt/GDP ratio is sustainable, it fails to highlight the risk that its debt policy has been becoming unsustainable in recent years.

Panel evidence on the impact of tourism growth on poverty, poverty gap and income inequality

Using a panel of 13 tourism-intensive economies for the period 1995–2012, this paper shows that rising growth in tourism which is proxied by tourism receipts to GDP ratio has an impact on poverty conditional on the poverty measure used. Using a panel Vector Autoregression method, there is little evidence to suggest that growth in tourism reduces headcount poverty. However, the poverty gap measure shows that the amount of money needed to help the poor out of poverty is significantly reduced. Based on different types of Gini coefficient, the results fail to find an improvement in income inequality resulting from tourism growth. Alternative measures such as relative poverty and poverty gap may be considered to better assess the impact of tourism on the poor.

Regional Differences Pose Challenges for Food Security Policy: A Case Study of India

Mahadevan R. and Suardi S. Regional differences pose challenges for food security policy: a case study of India, Regional Studies. This paper examines factors affecting the calorie gap by considering the risk of calorie inadequacy or excess at the tails of food intakes. Non-linear estimations accounting for rural/urban differences in more and less developed states allow for policy-making on two levels. First, the calorie gap was found to respond differently depending on the calorie status of the individual, to various socio-economic characteristics, social assistance programmes, as well as caste and religion. Second, these impacts depended on rural/urban differences and at other times on the development of the states. These findings pose significant challenges towards achieving a balanced regional food security policy.

The Cascade Effect on Lending Conditions: Evidence from the Syndicated Loan Market

This paper investigates, both theoretically and empirically, how interactions among potential lenders may influence contract terms via informational cascade in the syndicated loan market. Our model shows that the ex-post observed interest rate is higher and the probability of syndication failure is lower when potential lenders can only observe the decisions of their predecessors versus when they can freely communicate with each other. Empirical tests confirm the models predictions and the existence of a cascade effect on lending conditions. Using relational distance to proxy for the segmentation of communication, we find that relational distance is positively related to the loan spread and the requirements for collateral and guarantees, but negatively related to the probability of syndication failure.