This paper highlights the findings of some of the recent research on capital flows, credit booms, and their attendant consequences for asset prices, business cycles, financial crises and the interaction among these. The aim is to condense key results from the relevant literature and promote...

The aim of this paper is to examine effectiveness of devaluation on the trade balance in four countries: Argentina, Brazil, Mexico and Peru. We use the Johansen-Juselius cointegration test and impulse response function to estimate the long-run and short- run effects of devaluation on the trade...

One of the greatest challenges China faces is how to reshape its heavily investment-driven mode of economic growth. By investigating how the rebalancing of Japan’s economic growth mode was realized in the 1970s, we indicate that it is essential in the rebalancing to correct the distortions in...

In this paper we provide an overview of the growth model in China and its prospects, taking a medium-run to long-run perspective. Our main conclusions are as follows. First, the still prevailing producer-biased model of managed capitalism in China tends to engender, as an inherent byproduct,...

This paper investigates empirically the relationship between savings and investment in Indonesia, Philippines and Thailand by employing the bounds testing procedure. There are not many studies on the Feldstein-Horioka puzzle for the developing countries. Using bounds testing for cointegration,...

One of the greatest challenges China faces is how to reshape its heavily investment-driven mode of economic growth. By investigating how the rebalancing of Japan's economic growth mode was realized in the 1970s, we indicate that it is essential in the rebalancing to correct the distortions in...

Just when China’s leaders receive conflicting signals of “overheating” and “below-potential growth”, they encounter tremendous external pressure to revalue the Renminbi (RMB) substantially. Our conclusion is that the major macroeconomic challenges have their roots in China’s...

The ‘saving for a rainy day’ hypothesis implies that households’ saving decisions reflect that they can (rationally) predict future income declines. The empirical relevance of this hypothesis plays a key role in discussions of fiscal policy multipliers and it holds under the null that the...

This paper examines the growing gap between the theoretical and empirical growth literature and policy needs of the developing economies. Growth literature has focused mainly on long term growth outcomes, but policy makers of the developing economies need rapid improvements in the short to...

This paper attempts to assess how compatible China is with respect to its dollar-based exchange rate regime. Assessment is made in terms of the real convergence criteria suggested by the optimum currency areas (OCA) theory. In light of the endogenous problem in OCA analysis and this view of...