UNDERSTANDING MARKET REACTION TO COVID-19 MONETARY AND FISCAL STIMULUS IN MAJOR ASEAN COUNTRIES

In this paper, we examine the effect of fiscal and monetary policy stimulus actions during the COVID-19 pandemic on the stock markets of four ASEAN countries, namely, Indonesia, Singapore, Malaysia, and Thailand. Using time-series regression models, we show the relative importance of monetary and fiscal policies. Our findings suggest that 7-days after the policy announcement, fiscal policies helped cushion financial market losses in Indonesia, Singapore and Thailand. We do not find any robust evidence of policy effectiveness for Malaysia. While our investigation is preliminary it opens an additional avenue for understanding the effectiveness of policy stimulus.

REAL EXCHANGE RATE MISALIGNMENTS: THE CASE OF THE INDONESIAN RUPIAH

This paper analyses the equilibrium price of the Indonesian Rupiah using the Synthetic Control Method (SCM) and assesses its misalignments. We find evidence of Rupiah misalignment, as the currency was undervalued for most periods, except for 1993-1996. This finding is robust across model specifications, predictors, and weighting. Our finding implies that keeping the exchange rate at its equilibrium level is ideal, and that policymakers can take advantage of the undervalued currency to promote economic growth via exports.

COVID-19, POLICY RESPONSES, AND INDUSTRIAL PRODUCTIVITY AROUND THE GLOBE

We examine whether the COVID-19-induced policy responses by countries moderated the negative impact of the pandemic on industrial productivity. Using a panel of the 50 most affected countries by the pandemic, we show that the policy responses do not only help reduce the spread of COVID-19, but they also moderate its negative impact on industrial productivity and help steer countries back to their growth paths. We demonstrate that, in the absence of the pandemic, some of the policy responses (i.e., lockdowns, travel restrictions, etc.) would have reduced productivity. We further demonstrate that our estimates are robust when considering alternative specifications of our productivity model. Our study provides strong support for evidence-based policies and emphasizes, consistent with theoretical arguments, that an optimal policymix is fundamental to steering economies back to their steady productivity growth paths when facing negative shocks.

DIVERSIFICATION GAINS FOR A HOME BIASED TRADER IN THE EMERGING AND FRONTIER EQUITY MARKETS

We study the case of a home-biased equity trader based in Asia, Central and Eastern Europe, the Middle East and North Africa, or Latin America, who is looking at diversifying his/her investment risks internationally within his/her region and three other emerging/frontier regions. We focus on explaining the dynamic conditional correlations between equity markets from 3 January 2002 to 11 November 2016. Timevarying opportunities for diversification are found in several nations across regions. However, diversification opportunities outside a region are largely reserved for bad times, such as during the global financial crisis and the European sovereign debt crisis.

VOLATILITY SPILLOVER OF INTRADAY EXCHANGE RATES ON SOME SELECTED ASEAN COUNTRIES

In this paper, we use hourly exchange rate data for selected ASEAN countries (Singapore, Indonesia, Malaysia, Thailand and the Philippines) to test the hypothesis that exchange rate own shocks dominate exchange rate volatility. We find strong evidence that own exchange rate volatility explains between 64% to 86% of their own exchange rate volatility movements. These results do not change when we include the Chinese CNY currency in the analysis. Moreover, we find that exchange rate shocks of ASEAN countries explain 36%, 24% and 23% of exchange rate volatility movements of Indonesia, Thailand, and Singapore, suggesting that for these countries are more synchronized.

FOREIGN TRADE, EDUCATION, AND INNOVATIVE PERFORMANCE: A MULTILEVEL ANALYSIS

This study analyses the innovative performance of 5,273 companies across 64 different economic sectors and 32 different regions in Colombia. We assess the effects of education and open economy variables on the innovative performance of firms by analyzing firm, sectoral, and regional level determinants. The study takes the multilevel approach of the innovation process considering the structure and behavior of innovation systems in developing countries. We furthermore focus on technology transfer from foreign trade and the role of education in the process of innovation. We find that education and open economy variables have a significant relationship with innovation performance at the firm and regional levels. We finally conclude that Colombia has a fragmented innovation system with a weak institutional structure, and low interaction between policymakers, industry, universities, research centers.

THE EFFECT OF SAVING ACCOUNT OWNERSHIP AND ACCESS TO FINANCIAL INSTITUTIONS ON HOUSEHOLD LOANS IN INDONESIA

This study investigates whether saving account ownership and access to financial institutions influence household credit in Indonesia. Using a multinomial logit regression model and a sample of 294,426 households from the 2018 national socioeconomic survey and the village potential data, we find that account ownership is essential in encouraging formal credit and reducing informal credit. Access to commercial banks, rural banks, and cooperatives can then improve formal credit without significantly reducing informal credit. Hence, the government needs to encourage bank account ownership and facilitate access to financial institutions in order to promote formal credit and reduce informal credit.

PALM OIL PRICE–EXCHANGE RATE NEXUS IN INDONESIA AND MALAYSIA

In this study, we extend the literature analyzing the predictive content of commodity prices for exchange rates by examining the role of palm oil price. Our analysis focuses on Indonesia and Malaysia, the two top producers and exporters of palm oil, and utilizes daily data covering the period from December 12, 2011 to March 29, 2021, which is partitioned into two sub-samples based on the COVID-19 pandemic. Relying on a methodology that accommodates some salient features of the variables of interest, we find that on average the in-sample predictability of palm oil price for exchange rate movements is stronger for Indonesia than for Malaysia. While Indonesia’s exchange rate appreciates due to a rise in palm oil price regardless of the choice of predictive model, Malaysia’s exchange rate only appreciates after adjusting for oil price. However, both exchange rates do not seem to be resilient to the COVID-19 pandemic as they depreciate amidst dwindling palm oil price. Similar outcomes are observed for the out-of-sample predictability analysis. We highlight avenues for future research and the implications of our results for portfolio diversification strategies.

EFFECTS OF RENT-SEEKING ON ECONOMIC GROWTH IN LOW-INCOME ECONOMIES

Sluggish growth in low-income countries, despite the high performance in other economic indicators, motivates the literature to switch attention to institutions. Despite its crucial economic implications, there is limited attention on rent-seeking as a driver of economic growth in low-income countries. This paper investigates the effect of rent-seeking on growth in low-income countries from 2004 to 2017using the system generalized method of moments estimator. The empirical results reveal that rent-seeking negatively affects growth, implying that it obstructs the pace of economic development in low-income countries. Hence, it is necessary for policymakers in these countries to adopt anti-rent-seeking policies to promote a rapid and sustainable growth.

THE INTERNET MIRACLE: THE IMPACT OF INTERNET ACCESS ON HOUSEHOLD SAVING IN INDONESIA

This study analyzes the impact of access to the internet and household saving behavior, in the context of the amount of savings and the saving preferences, in Indonesia. Using the fifth wave of the Indonesia Family Life Survey data, this study finds that there is a positive effect between internet access and household savings. This access includes private internet access and public internet access. Nonetheless, the effect of private internet access differs from public internet access. Private internet access positively impacts both the amount of savings and the saving preferences, whilst public internet access only increases the amount saved, not the saving preferences.