As Bremmer (2010) raised an alert, trade frictions between free market economies which are represented by the United States and state capitalist economies which are represented by China have been arising, taking various forms such as the former’s imposition of antidumping and countervailing duties on products from the latter as well as WTO disputes between them on these measures and subsidies. This article examines what challenges these phenomena are posing to the existing trade rules and how they are transforming such rules.
The major objective of this paper is to show importance and significance of capital controls and management under extremely free capital flows in the global markets. Monetary easing policies, adopted by the Federal Rerve Board and Bank of Japan after the Lehman Shock (Sept 2008), have accelerated capital flows to emerging economies. However, risks of crises in both of advanced and emerging economies are increasing with any change in the outlook of the US economy which affects the timing of expected interest rate hike by the FRB. Under complete free capital flows, almost all emerging market economies, including a large economy like China, are now totally dependent on the global capital flows in the world markets. Granger causality tests and impulse response functions of VAR model are used to analyze the effects and causality of capital flows between the US, Japan, Hong Kong and China, to demonstrate the influences and effects of extremely easing monetary policy of Quantitative and Qualitative Monetary Easing [QQE] (BOJ) and Large-Scale Asset Purchases [LSAPs] or Quantitative Easing [QE] 2/3 (FRB). The results show that significant causality between the US /Japan and China in both monetary base and money stocks. The initiation of linkage and integration of trading between Hong Kong and Shanghai markets in November 2014 triggered significant capital flows into China, which resulted in unusual rise of stock prices that collapsed in summer 2015. The experience of such a bubble and burst in China has shown that even a partial liberalization of capital account through an offshore market like Hong Kong has resulted in emergence of significant risks on the global markets and economies. It is therefore necessary and important to introduce several effective measures of capital controls and management to attain stable economic growth and stability in the global markets with less volatility in both advanced and emerging economies.
The originality of this paper is to build a theoretical framework of long term development process of an economy which identifies the characteristics of both low and high middle income economies, and indicates the problems of Asian countries in those two groups. For low middle income countries, there is room for input-driven growth so that the improvement of factor markets and thus the resource allocation is essential. For higher middle income countries, emphasis on the total factor productivity and quality of human resources is more important. The analysis also incorporates the long term changes in the comparative advantage of an economy and indicates the conditions for a country to escape the middle income trap.
This paper investigates the effects of Rules of Origin (ROO) on economic welfare and the optimal level of ROO. When the intermediate goods market is monopsony, a marginal increase of the level of ROO decreases the monopsony power for final goods producer located in member countries and raises the welfare of the member countries. In this case, the non-member country (rest of the world) does not affect the intermediate goods market. Therefore, the welfare of the non-member country does not change. This case implies the possibility of the formation of Free Trade Agreement (FTA) with welfare-improving ROO.
This paper analyzes the factors behind the extra cost of dollar procurement or “basis” that occurred in dollar/yen swaps from mid-2014 until early 2016. Basis is called Japan premium in the late 1990s and generally discussed in connection with the deterioration of Japanese banks’ credit quality. However, in spite of improved credit quality of the Japanese banks, basis is still exposed to upward pressure. This paper investigates the possibility that the structural vulnerability of the dollar procurement by Japanese investors, such as their demand for the dollar being too large for the dollar supply capacity of the Western banks and for the market scale.