Search

This article provides an overview of the macroeconomic challenges facing the 10 countries in the Association of Southeast Asian Nations (ASEAN). It discusses various macroeconomic indicators and the importance of achieving high levels of economic growth. The article also explores ASEAN's participation in Regional Value Chains (RVCs) and Global Value Chains (GVCs), particularly in the automotive and electronics industries. It examines the adoption of inflation targeting frameworks by ASEAN countries and evaluates their macroeconomic performance. The text further analyzes the fiscal sustainability of Indonesia, Malaysia, and Thailand, providing policy recommendations to enhance revenue collection and reduce subsidies. It also discusses the challenges faced by Vietnam's economy and suggests policy measures to overcome them. The article touches on economic issues in Cambodia and Laos, including technology spillovers, Central Bank Digital Currency (CBDC) implementation, and financial system reform. The perspectives presented offer insights into these countries' economic situations and potential policy measures. [Extracted from the article]

The experience of flexible inflation targeting in ASEAN‐5 has been favorable. The present paper shows improvements in macroeconomic outcomes consistent with the framework's mandated objectives: lower levels and volatility of inflation, more stable economic growth, and a well‐functioning financial system. Using difference‐in‐difference approaches, we find that, for ASEAN‐5 and developing countries, the inflation targeting framework mainly benefits adopters in terms of reducing inflation levels. In response to the challenges emanating from capital flow volatility and domestic financial imbalances, over the past 20 years, ASEAN‐5 policy frameworks have continuously evolved to incorporate various policy tools. These include, among others, foreign exchange intervention, macroprudential policy, and capital flow measures. A multitude of policy tools is arguably one of the key factors contributing to sound macroeconomic outcomes during the post‐targeting periods. [ABSTRACT FROM AUTHOR]

In the allocation of indivisible objects under weak priorities, a common practice is to break the ties using a lottery and to randomize over deterministic mechanisms. Such randomizations usually lead to unfairness and inefficiency ex ante. We propose and study the concept of ex ante fairness for random allocations, extending some key results in the one‐sided and two‐sided matching markets. It is shown that the set of ex ante fair random allocations forms a complete and distributive lattice under first‐order stochastic‐dominance relations, and the agent‐optimal ex ante fair mechanism includes both the deferred acceptance algorithm and the probabilistic serial mechanism as special cases. Instead of randomizing over deterministic mechanisms, our mechanism is constructed using the division method, a new general way to construct random mechanisms from deterministic mechanisms. As additional applications, we demonstrate that several previous extensions of the probabilistic serial mechanism have their foundations in existing deterministic mechanisms. [ABSTRACT FROM AUTHOR]

We develop a theoretical framework and present a corresponding empirical analysis of the Food and Drug Administration’s irrigation water quality regulatory standard under the Food Safety Modernization Act using lettuce as a case study. We develop a stochastic price endogenous partial equilibrium model with recourse to examine the standard’s efficacy under various scenarios of foodborne illness severity, standard implementation, demand response to foodborne outbreaks, and irrigation costs. The stringency of regulation is evaluated with endogenous producer response to regulatory requirements and corresponding implications for economic surplus. The baseline results show that in the case of the lettuce market, the proposed microbial irrigation water quality regulation in the Food Safety Modernization Act (FSMA) is not cost effective relative to the existing Leafy-Greens Marketing Agreements relying on water treatment for mitigation of microbial contamination. However, FSMA can be cost effective if water treatment is sufficiently expensive.

This article characterizes the relation between the equilibrium unemployment insurance replacement rate and the frequency of its political choice. We first use a tractable analytical model to show how insurance, incentive, and redistribution effects interact at the equilibrium. We then examine a fully repeated choices equilibrium in a quantitative heterogeneous agents model and show that unemployment persistence, whether a policy is announced first or not, and the type of the political process are key determinants of the relation between the equilibrium replacement rate and the frequency of its choice. In a utilitarian welfare context, we find that the equilibrium replacement rate is higher if the policy is chosen more frequently but this relation is reversed in a median voter context. [ABSTRACT FROM AUTHOR]

Why is criminal law enforcement increasingly punitive, despite that the situation has improved for decades? This paper investigates this question from the perspective of political misinformation. To this end, we develop a law enforcement model with political competition and examine how political parties' campaigns affect voters' perceptions of crime and equilibrium law enforcement policy. In a political campaign stage, we show that one political party has an incentive to overstate the severity of crime, while the other party has an incentive to correct voters' beliefs. However, although the two parties attempt to change voters' beliefs in opposite directions, we find that the total effect of a political campaign is more likely to drive both parties' policies in a harsh direction. [ABSTRACT FROM AUTHOR]

Interest group influence in the policy process is often theorized to occur through a mechanism of exchange, persuasion, or subsidy. Here, we explore how business groups may also exert influence by intimidating policymakers—a form of persuasion, but one based on the provision not of policy information but of political information. We develop a theory in which a business firm lobbies a regulator to communicate political information about its capacity to commit to future influence-seeking activities that would sanction the regulator. The regulator assesses the credibility of this message by evaluating the firm's commitment to lobbying. Guided by our theory, we present empirical evidence consistent with expectations that intimidation can shape regulatory outcomes to the advantage of certain firms, both through a chilling effect, by which lobbying derails nascent regulatory plans, as well as a retreating effect, by which opposition to published proposals leads to their withdrawal. [ABSTRACT FROM AUTHOR]

Punitive anti-crime policies in the Americas have contributed to steadily increasing rates of incarceration. Harsh penalties are often demanded by citizens, making them attractive to politicians. Yet the contextual determinants of participation in crime are rarely understood by the public. In this article, we employ a survey experiment conducted in Chile in order to examine how the provision of information about the prison population shapes tastes for punitive anti-crime policies. Respondents in the treatment group received information about the low educational attainment of prisoners. This information led to substantial changes in policy preferences. Tasked with allocating resources to anti-crime policies using a fixed budget, treated respondents assigned between 20% and 50% more to socially oriented anti-crime policies (relative to punitive policies) than respondents in the control group, and they reduced their support for " iron fist " policing. Our findings suggest that providing information to citizens might change the policy equilibrium in the Americas. [ABSTRACT FROM AUTHOR]

This paper investigates the role of the prospect theory preferences in influencing the relationship between performance goals and subsequent performances. We find an inverted-U relationship between the goal of the central government and the performance of local governments in land supply based on China's land supply data between 2005 and 2013. The higher land supply goals of the central government initially increase and then decrease the land supply by local governments. We further explore the inverted-U relations by considering local governments' prospect theory preferences theoretically and empirically. Our findings indicate that local governments are goal-dependent and risk-seeking in face of the extraordinarily ambitious goals set by the central government. [ABSTRACT FROM AUTHOR]

Manipulability is a threat to the successful design of centralized matching markets. However, in many applications some manipulation is inevitable and the designer wants to compare manipulable mechanisms to select the best among them. We count the number of agents with an incentive to manipulate and rank mechanisms by their level of manipulability. This ranking sheds a new light on practical design decisions such as the design of the entry‐level medical labor market in the United States, and school admissions systems in New York, Chicago, Denver, and many cities in Ghana and the United Kingdom. [ABSTRACT FROM AUTHOR]

Almost 160 years on from their political unification, Italian territories display large economic disparities. We exploit different data sources to assess the roots of this heterogeneity at the province level, contending that citizenship skills and their contribution to the quality of political institutions are key sources of inertia and lack of convergence. Eventually, they may explain the increasing divergence displayed lately by data. We contribute to the literature in four ways. Firstly, our results offer support to the idea that remote measures of people's literacy are a good proxy for the long-lasting effect of institutions and a predictor of current economic performance. Secondly, after controlling for the historical determinants of institutions, our estimates confirm expectations about the role of current and remote measures of institutional quality in explaining per capita GDP at province level. Thirdly, we provide evidence on the role of entrepreneurship as the main mediator of the institutions-development link to GDP at the local level. Finally, we present evidence on the cyclicality of the contribution of institutional quality to economic performance; we show that the role of institutions is quite stable, and that GDP is more responsive to the quality of institutions in good times. [ABSTRACT FROM AUTHOR]

The article "Comment on 'Flexible Inflation Targeting and Macroeconomic Performance: Evidence from ASEAN'" by Somkiat Tangkitvanich discusses the empirical assessment of inflation targeting frameworks in Association of Southeast Asian Nations (ASEAN) countries. The study finds that these frameworks primarily aid in reducing inflation levels but also highlight the integration of diverse policy instruments to address capital flow volatility and domestic financial imbalances. The article suggests that future research should explore the interaction between fiscal and monetary policies and the public's understanding of inflation targeting. It concludes that while inflation targeting is beneficial, complementary policies and effective communication are equally important for macroeconomic outcomes in ASEAN countries. [Extracted from the article]

The theory of full implementation has been criticized for using integer/modulo games, which admit no equilibrium (Jackson (1992)). To address the critique, we revisit the classical Nash implementation problem due to Maskin (1977, 1999) but allow for the use of lotteries and monetary transfers as in Abreu and Matsushima (1992, 1994). We unify the two well‐established but somewhat orthogonal approaches in full implementation theory. We show that Maskin monotonicity is a necessary and sufficient condition for (exact) mixed‐strategy Nash implementation by a finite mechanism. In contrast to previous papers, our approach possesses the following features: finite mechanisms (with no integer or modulo game) are used; mixed strategies are handled explicitly; neither undesirable outcomes nor transfers occur in equilibrium; the size of transfers can be made arbitrarily small; and our mechanism is robust to information perturbations. [ABSTRACT FROM AUTHOR]

We employ a 70-year panel to examine the factors that influenced the timing and type—statutory prohibition, constitutional prohibition, or local option—of US state-level alcohol regulations in the seven decades prior to national Prohibition in 1920. We find that alcohol interests such as the state's level of employment in breweries and distilleries, as well as the amounts of barley grown, generally impacted a state's legal regime. Our results also suggest that states with larger concentrations of "dry" Christian denominations were more likely to prohibit, while those with more "wet" denominations were less likely to do so. Nearest neighbor effects likewise were important: states were generally more likely to pass statewide prohibitions when their neighboring states had such prohibitions in place. [ABSTRACT FROM AUTHOR]

As Christian Bjørnskov and Stefan Voigt remind us in their article, "By May 10, 2020, 99 governments, equal to almost precisely half of all sovereign governments, had declared a state of emergency (SOE) due to COVID-19." That governments should not be the primary actors in dealing with crises such as the COVID-19 pandemic can be explained, as Bjørnskov and Voigt explain, in terms of political economy. Entrepreneurs, they argue, "provide goods [individuals] need to survive and combat the pandemic", "services that [are] need[ed] to stay connected during a pandemic" and in addition, "entrepreneurs are often a source of charity and leadership during a pandemic.". [Extracted from the article]

In China's regulated housing markets, a married couple may choose strategically to divorce in order to purchase more houses and/or purchase with more favorable financial conditions. Our study examines the propensity for strategic divorce induced by housing market regulations in China. To overcome the difficulty of using conventional divorce data to distinguish between a "true" divorce and a strategic (or a "fake") divorce, we design an identification strategy using data on internet searches for divorce- and marriage-related keywords in 32 Chinese major cities from 2009 through 2016. Our difference-in-differences estimates provide robust evidence that housing market regulations significantly increase the propensity for strategic divorce. Our results also show that the increase in the propensity for strategic divorce is weaker in cities with higher male–female ratios and with stronger Confucian ideologies. These findings point to the role that housing market regulations play in distorting a family's choices, as well as to the importance for policymakers to consider unintended impacts of regulations. [ABSTRACT FROM AUTHOR]

This article describes the process from first proposals in the early 1990s to project completion many years later for seven large Swedish road and railway projects. The purpose is to find reasons for the massive cost overruns as well as explanations for why projects are brought to completion despite much higher costs than when the decision to build was made. Cost overruns are set in an institutional context to highlight the interplay among national, regional, and local policymakers. National investment programs are seen as promises by other parts of society, irrespective of whether project costs increase during the process toward procurement and implementation. Another aspect is that the infrastructure manager's administrative framework currently makes it impossible to compare costs in contracts with final cost, meaning that there is no institutionalized learning process in place. Design preparations and the estimation of costs for new projects must therefore be done without an understanding of what has been working well in the implementation of previous projects. While Benefit-Cost Analysis (BCA) played no role in the planning of the seven projects, the article sends a stark warning that early cost estimates provide poor input for assessing project rate of return. [ABSTRACT FROM AUTHOR]

We ask whether voters rewarded conservative politicians who voted in favor of same-sex marriage. The evidence is based on a rollcall vote in the German national parliament (Bundestag) in June 2017. That vote had a profound influence on public discourse concerning the social-political platforms of the conservative parties in Germany, the Christian Democratic Union (CDU) and its Bavarian sister party Christian Social Union (CSU). National elections took place in September 2017. We find that, when comparing the outcomes of the 2017 and 2013 national elections, the vote share of conservative politicians who voted in favor of same-sex marriage was around 1.29% points higher (about 0.33 standard deviations of the change in the candidate's vote share) than the vote share of conservative politicians who did not vote in favor of same-sex marriage. Voters apparently were seeking policy outcomes other than economic ones when evaluating politicians' performances in office. [ABSTRACT FROM AUTHOR]