Exchange Rate Flexibility and the Integration of the Securities Market in East Asia
Pages 293-309
Takuji Kinkyo and Shigeyuki Hamori

DOI: http://dx.doi.org/10.6000/1929-7092.2014.03.22

Published: 19 August 2014

Abstract: This paper discusses the time-varying degree of flexibility in exchange rate regimes and assesses the extent to which securities markets are integrated in East Asia. The dynamic conditional correlation model developed by Engle (2002) is used to analyze the time-varying characteristics of the conditional correlations of exchange rates as well as of bond and equity returns in emerging Asian economies. First, the presented analyses find that the flexibility of Asia’s exchange rate regimes increased substantially after the Asian crisis of 1997-98. Second, we show that Asia’s equity markets are becoming more globally and regionally integrated, whereas the bond markets in the region are still divided by national borders. These results suggest the existence of more scope for policymakers to promote financial integration in Asia, particularly in its bond markets.

Whose Governance? IMF Austerities in a Small Island State: The Case of Jamaica
Pages 190-199
Ann Marie Bissessar

DOI: http://dx.doi.org/10.6000/1929-7092.2014.03.15

Published: 07 July 2014

Abstract: The International Monetary Fund and the World Bank have for a long time embarked on what can be described as a ‘trustee’ relationship with countries in the Commonwealth Caribbean. From the latter half of the 1970s, countries such as Trinidad and Tobago, Guyana, Barbados as well as Grenada were ‘forced’ because of their chronic need for ‘hard’ currency loans to approach the IMF and the World Bank. These loans were accompanied by structural adjustment measures. This paper attempts, for the first time, to evaluate, in the case of Jamaica, whether the measures introduced by the Lending Agencies resulted in some measure of economic growth in the countries under review. The paper then examines the new agreements entered into by these countries and the measures that accompanied them. The overarching argument is that the forces of globalization as well as austerity measures introduced by lending agencies such the IMF and the World Bank prevents rather than encourages small island governments¹ to embark on ‘national’ development plans and programs. In other words, the primary argument of this paper is that these countries are constrained in their ability to ‘govern’ themselves; rather their economic decisions are largely crafted by the forces of globalization and further reinforced by international lending agencies such as the World Bank and the International Monetary Fund.

An Empirical Study of Sectoral-Level Investments in New Zealand
Pages 140-155
W.A. Razzak

DOI: http://dx.doi.org/10.6000/1929-7092.2014.03.11

Published: 13 June 2014

Money In Modern Macro Models: A Review of the Arguments
Pages 156-174
Franz Seitz and Markus A. Schmidt

DOI: http://dx.doi.org/10.6000/1929-7092.2014.03.12

Published: 13 June 2014

National Economics
Pages 48-83
James H. Hughes

DOI: http://dx.doi.org/10.6000/1929-7092.2014.03.06

Published: 20 March 2014

Abstract: With the slow recovery from the Global Economic Recession that began in 2008 and its lingering high unemployment in the United States and Europe, in spite of the best efforts of governments and central banks to remedy it, it may be helpful to suggest some adjustments in current economic thinking.

One adjustment may be found in the introduction of National Economics, in addition to macro and micro-economic theory, to better engage issues of free trade, the international outsourcing of manufacturing and research and development known as globalization, protectionism, Chinese mercantilism, and national investment policies, which may accompany the preparation of economic stimulus packages.

While free trade is generally acknowledged as a positive factor in contributing to economic growth, it has been used by mercantilists, both countries and corporations, as a cloak to achieve a National Income redistribution to enrich themselves at the expense of reducing employment, and wages and salaries within a country, and to substitute poorly made or low quality goods for goods of better quality.

One issue of National Economics that stands to be addressed is the contribution of Chinese mercantilism to the Global Economic Recession and its effect on unemployment rates. A major trading partner with the United States, Europe, and other countries, China uses a substantially undervalued currency compared to the U.S. dollar to increase its export of manufactured goods and economic growth rate, while suppressing the manufacturing sector in its trading partners.

Within many countries, large trade imbalances with China play a role in the distribution of National Income by depressing employment, wages, salaries, and investment. While mercantilists claim that these reductions in employment, wages, and salaries are offset by the proliferation of inexpensive Chinese goods, low quality goods do not compensate for reductions in employment and investment.

A second issue of National Economics that stands to be addressed, at least within the United States, is the need to prepare economic stimulus packages that represent a balance of new spending along with adjustments in entitlement programs and a reworking of the current regulatory environment, which policymakers use to reward corporate dinosaurs and financial manipulators, while the constrict the ability of small banks and lending institutions such as credit unions to make consumer loans and finance mortgages, with the effect of repressing the nation's economy.

Finally, some thoughts are given regarding the effect of Chinese mercantilism on Taiwan's economy, and Japan's effort to renew its economy.