National Bureau of Economic Research East Asia Seminar on Economics – serie

Extremely low inflation rates have moved to the forefront of monetary policy discussions. In Asia, a number of countries - most prominently Japan, but also Taiwan and China - have actually experienced deflation over the last fifteen years. "Monetary Policy with Very Low Inflation in the Pacific Rim" explores the factors that have contributed to these circumstances and forecasts some of the potential challenges faced by these nations, as well as some potential solutions. The editors of this volume attribute low inflation and deflation in the region to a number of recent phenomena. Some of these episodes, they argue, may be linked to rapid growth on the supply side of economies. Here, inadequate demand policy can produce what is referred to as a "liquidity trap" in which the expectation of falling prices encourages agents to defer costly purchases, thereby discouraging growth. Low inflation rates can also be traced to the presence of a "zero-lower bound" on interest rates, as well as the inflation-targeting phenomenon. Targets have been set so low, the editors argue, that in some cases a few bad shocks lead to deflation.

The rapid emergence of East Asia as an important geopolitical-economic entity has been one of the most visible and striking changes in the international economy in recent years. With that emergence has come an increased need for understanding the problems of interdependence. As a step toward meeting this need, the National Bureau of Economic Research joined with the Korea Development Institute to sponsor this volume, which focuses on the complexities of tax reform in a global economy. Experts from Taiwan, Korea, the Philippines, Japan, and Thailand, as well as the United States, Canada, and Israel examine the major tax programs of the 1980s and their domestic and international economic effects. The analyses reveal similarities between the United States and countries in East Asia in political constraints on policy making, and taken together they show how growing interdependence interacts with domestic economic and political concerns to affect issues as politically vital as tax reform. Economists, policymakers, and members of the business community will benefit from these studies.

During the first three decades following the Second World War, an increasingly open international trading system led to unprecedented economic growth throughout the world. But in recent years, that openness has been threatened by increased protectionism, regional trading arrangements--Europe 1992 and the U.S.-Canada Free Trade Agreement--and setbacks in negotiations on the General Agreement on Tariffs and Trade. In Trade and Protectionism, American and East Asian scholars consider the dangers of this trend for the world economy and especially for East Asian countries. The authors look at the current global trading system and at the potential threats to East Asian economies from possible regional arrangements, such as separate trading blocks in the Western Hemisphere and Europe. They cover trade between the United States and Japan, Korea and Japan, and Japanese-East Asian trade policies; trade in agriculture and semiconductors and the frictions that have jeopardized this trade; and direct foreign investment.The contributors round out the work with discussions of the political economy of protection in Korea and Taiwan and political economy considerations as they affect trade policy in general. This is the second volume of the National Bureau of Economic Research-East Asia Seminar on Economics. The first volume, The Political Economy of Tax Reform, also edited by Takatoshi Ito and Anne O. Krueger, addresses tax reform in the global economy.

This volume explores East Asia's macroeconomic experience in the 1980s and the economic impact of East Asia's growth on the rest of the world. The authors explore the causes of capital flows, changes in trade balances, and exchange-rate fluctuations in East Asia and their effects on other countries. These 14 papers are organized around four themes: the overall determinants of growth and trading relations in the East Asian region; monetary policies in relation to capital controls and capital accounts; the impact of exchange-rate behaviour on industrial structure; and the potential for greater regional integration. The contributors examine interactions among exchange-rate movements, trade balances and capital flows; how government monetary policy affects capital flows; the effect of exchange rates on industrial structure, inventories, and prices; and the extent of regional integration in East Asia.

The contributors to this volume analyze the growth experiences of Japan, Korea, China, Hong Kong, Singapore and Taiwan in light of the developed endogenous growth theory, in order to provide an understanding of the economic boom in East Asia. The theory explored in this volume attributes the phenomenal economic success of these countries to the role of an outward orientation - a focus on exporting rather than on protecting home markets. In addition, the importance of exchange-rate behaviour, of the supportive role of government policy, and of the accumulation and promotion of physical and human capital, are explored in detail.

The increased mobility and volume of international capital flows is a major trend in international finance. While countries worldwide have engaged in financial deregulation, this pattern is most pronounced in East Asia, where it has created a major effect on the behaviour of exchange rates, interest rates and capital flows. In these 13 essays, American and Asian scholars analyze the effects of financial deregulation and integration on East Asian markets. Topics covered include the roles of the United States and Japan in trading with Asian countries, macroeconomic policy implications of export-led growth in Korea and Taiwan, the effects of foreign direct investment in China, and the impact of financial liberalization in Japan, Korea, and Singapore. Demonstrating the complexity of financial deregulation and the challenges it poses for policy makers, this volume seeks to provide a picture of the overall status of East Asian financial markets for scholars in international finance and Asian economic development.

The volume of capital flows between industrial and developing countries has grown dramatically in the past decade and has become a major issue in a world that is increasingly "globalized." Here Takatoshi Ito and Anne O. Krueger, two leading experts on this topic, have assembled a group of scholars who address different types of capital flows—bank lending, bonds, direct foreign investment—and the implications they hold for economic performance. With its particular focus on the Asian financial crises, this work presents a new model for policy makers everywhere in thinking about the role of private capital flows.

In recent years the tremendous growth of the service sector has outstrippped that of manfacturing in many industrialized nations, causing economists to focus on both the policy issues raised by services and the differences between production and delivery of goods and services. This is the first book-length attempt to analyze trade in services in the Asia-Pacific region. Contributors provide overviews of issues involved in studying the service sector; investigate the impact of increasing trade in services on the economies of Taiwan, Korea and Hong Kong; present detailed analyses of specific service sectors; and extend our understanding of trade in services.

Over the last twenty-five years, there has been an acceleration in the move from government regulation toward privatization. Governance, Regulation, and Privatization in the Asia-Pacific Region is the first thoroughgoing account of the relative success of the different approaches to privatization as undertaken in Korea, China, Australia, and Japan. In most contexts, privatization is expected to yield greater efficiency and cost effectiveness while avoiding the corruption and bloated budgets of government regulation or monopoly control. But broad-scale privatization, as implemented in East Asia, has also yielded its share of difficulties when ill-designed. Due to a lack of both legal infrastructure and management guidelines, privatization sometimes created a vacuum in corporate governance for some of the region's most important industries and in some cases merely reinstated monopoly-like configurations. The papers presented in this book analyze the experiences of privatization in several industries, including railroads and telecoms, as well as corporate governance problems, accounting issues, and challenges for the future in East Asia.

Recent studies show that almost all industrial countries have experienced dramatic decreases in both fertility and mortality rates. This situation has led to aging societies with economies that suffer from both a decline in the working population and a rise in fiscal deficits linked to increased government spending. East Asia exemplifies these trends, and this volume offers an in-depth look at how long-term demographic transitions have taken shape there and how they have affected the economy in the region. "The Economic Consequences of Demographic Change in East Asia" assembles a group of experts to explore such topics as comparative demographic change, population aging, the rising cost of health care, and specific policy concerns in individual countries. The volume provides an overview of economic growth in East Asia as well as more specific studies on Japan, Korea, China, and Hong Kong. Offering important insights into the causes and consequences of this transition, this book will benefit students, researchers, and policy makers focused on East Asia, as well as anyone concerned with similar trends elsewhere in the world.