Soo Y. Chua

ASEAN: economic integration and intra-regional trade

The study shed some light on the economic integration and intra-regional trade in the ASEAN countries, namely Indonesia, Malaysia, Philippines, Singapore and Thailand. Towards this goal, a gravity model is estimated for each of the five ASEAN countries based on the data from 1980 to 1995. Analysis reveals that the trade in ASEAN countries increases with the size of the economy. The ASEAN integration scheme did not increase intra-ASEAN trade, but an increase in trade occurred with members of a wider APEC group.

The savings-growth nexus for the Malaysian economy: a view through rolling sub-samples

The purpose of this study is to re-investigate the savings-growth nexus for the Malaysian economy using bounds testing approach to cointegration and Toda and Yamamoto (1995) and Dolado and Lütkepohl (1996) – TYDL Granger causality test. This study covered the sample period from 1971:Q1 to 2008:Q4. The cointegration results suggest that the variables are moving together in the long run and the TYDL Granger causality results indicate that the relationship between savings and economic growth is bilateral. In addition, the rolling sub-samples TYDL Granger causality test exhibited a relatively stable causal relationship running from savings to economic growth in Malaysia particularly before the onset of Asian Financial Crisis in 1997/1998.

An Investigation of the Effects of Prices and Exchange Rates on Trade Flows in East Asia

This paper investigates the dynamic response of imports and exports to changes in domestic prices, foreign prices and real effective exchange rates for Korea, the Philippines, Singapore and Thailand. A vector autoregressive model and cointegration analysis are used to study the long-run relationships and the short-run dynamics of these variables. The vector error-correction model indicates that in almost all cases, domestic and foreign prices have a larger impact on the trade flows than the real effective exchange rates. We cannot find any significant difference in the response time of import demand to shocks in prices and exchange rates; however, the response time for export supply varies among countries.

The Impact of the US and Japanese Economies on Korea and Malaysia after the Plaza Accord

This paper investigates the influence of the US and Japanese macroeconomic shocks on output in Korea and Malaysia before and after the Plaza Accord. This is done by using a cointegration/error-correction model in seven variables, consisting of world oil price, US and Japanese outputs and money supplies, domestic money and domestic output. Our results show that foreign shocks account for a higher proportion of output variability in Korea and Malaysia after the Plaza Accord. An interesting finding is that the influence of the US economy on Korea and Malaysia has declined while the Japanese influence has increased.

Effect of exchange rate volatility on industry trade flows between Malaysia and China

This paper investigates the impact of ringgit/yuan volatility on Malaysian trade with her largest trading partner, China. The short- and long-run impacts are estimated using bounds testing approach to cointegration analysis and disaggregated bilateral trade data by industry over the period of 1985–2010. Specifically, we considered a total of 151 importing and 24 exporting industries in Malaysia that traded with China. Our finding indicates that cointegration existed in 94 Malaysian import industry models and 16 Malaysian export industry models. Among these cases, exchange rate volatility has short-run effects on majority of the models. However, the short-run effects shift into the long-run effects in 46 out of 69 industries in import models and 5 out of 10 industries in export models. Results indicate that the exchange rate uncertainty has positive effects on majority of these industries.

How responsive are trade flows between Malaysia and China to the exchange rate? Evidence from industry data

This paper investigates the impact of currency depreciation on bilateral trade between Malaysia and China, especially how a real depreciation of ringgit against the yuan on each industry’s inpayments and outpayments affect the trade balance. We employ disaggregated quarterly data on import and export for 52 industries over the period 1993Q1 to 2012Q4. The results from the bounds testing approach to the cointegration and error-correction model reveal that the real bilateral exchange rate has short and long-run effects on the inpayments and outpayments of the industries. However, the short-run effects shift into the long run in 14 out of 35 industries in the inpayment models and 17 out of 44 industries in the outpayments models. Most of these are small industries producing intermediate goods. According to the ML condition, the depreciation of ringgit against yuan improves Malaysia’s trade balance with China in these industries.

Financial Market Integration of ASEAN-5 with China and India

This study analyzes the evolution of stock market integration of ASEAN-5 with China, India, the US, and Japan based on the DCC-MGARCH approach. It also examines the structural breaks that affected the correlations between the countries by using the Bai and Perron multiple structural breaks test. The findings confirmed an increase in the financial integration between ASEAN-5 and China but still at a relatively low level. This financial integration became prominent after January 2004. The structural changes that led to a gradual rise in financial market interdependence between ASEAN-5 and China are mostly due to the enforcement of government laws and the establishment of regional trade policies. However, ASEAN-5 does not respond to external disturbance simultaneously and the impact of external turbulence on each ASEAN-5 member is different. In summary, investors in ASEAN-5 may gain by diversifying their portfolios in China in the short run.

The Synchronisation of ASEAN-5 Stock Markets with the Growth Rate Cycles of Selected Emerging and Developed Economies

This study explores the changing direction and degree of financial integration of the emerging economies, People’s Republic of China (PRC) and India, with ASEAN-5 and compares it to the developed economies, the US and Japan, in a time-varying framework. The concordance and rolling concordance indices are used to study the cyclical behaviour in the ASEAN-5 stock markets with the economic activity of the emerging and developed economies. This study covers the period between January 1991 and June 2010. One of the more significant findings from this study is that ASEAN-5 stock markets do not react as a whole to external shock from these four trading partners. Each stock market in ASEAN-5 responded differently in terms of direction and degree towards the influences of the economic condition in these emerging and developed economies. The ASEAN-5 stock markets were less correlated with economic activities in emerging economies but were more aligned with economic activities in developed economies. In summary, ASEAN-5 stock market cycles were still more dependent on the developed economies’ growth rate cycles.

S-curve at the industry level: evidence from Malaysia’s bilateral trade with its major trading partners in East Asia

This study investigates the relationship between the terms of trade and trade balance for Malaysia with its three major trading partners namely China, Japan and Singapore using the S-curve. The lead and lag cross-correlations between the terms of trade and the trade balance resemble a horizontal S-curve. We evaluate the S-curve in 70 industries over the period 1974–2009. Initial results with aggregated bilateral trade data did not show any S-curve pattern. However, by using the industry level data, we found the existence of the S-curve pattern in some of these industries. Most of these are small and intermediate goods industries. Finally, our findings support that durables are more sensitive to real exchange rate changes than non-durables only in the case of China.

Trade Liberalization, Exports and Imports in Syria

This study attempts to investigate the effect of trade liberalization on exports and imports in Syria over the period 1980–2010. Trade openness is used as an indicator of trade liberalization. The cointegration test shows that trade openness has a positive effect on exports and imports. The Granger causality test indicates that there are bidirectional short-run causality relationships between trade openness and exports, and unidirectional short-run causality relationship running from trade openness to imports. In the long run, there is unidirectional long-run causality relationship running from exports to trade openness, and no long-run causality relationship between trade openness and imports. However, trade openness tends to have a greater effect on imports than exports.