Government Resource Subsidy and its Spillover Effects: Evidence from the Excessive Oil Consumption in China
The paper aims at analyzing the consecutive consequences of government resource subsidies in a particular industry, which can lead to the excessive oil consumption by other sectors and end users. To fully illustrate the investigation, we use the subsidies in Chinese steel production as a case study and a beginning point to develop theoretical and empirical models to examine the spillover effects, going from steel industry to a rapidly increase of overall country’s oil consumption. The theoretical model applies the market equilibrium concept to demonstrate a relationship among three economic sectors; steel industry, automobile, and households. Particularly, the government subsidies in Chinese steel production will enable the steel firms to obtain resource inputs at the lower price, making the output price of steels cheaper than the market price. As steel is a required input in automobile industry, this cheaper price of steels will induce the automotive firms to increase their production capacity, producing more cars and selling them at the cheaper price, which eventually results in the excessive usage of oil and gasoline by individuals. Using the data during the period of 1980-2012, the empirical analysis involves OLS regression and cointegration test to approve the validity of the theoretical model, which emphasizes on the strong relationship between Chinese oil consumption and steel production.
Keywords: Oil Consumption, Government Subsidies, Spillover Effects
Palm Oil Price, Exchange Rate, and Stock Market: A Wavelet Analysis on the Malaysian Market
Buerhan Saiti, Azlan Ali, Naziruddin Abdullah, and Sulaiman Sajilan
The study investigates causality between palm oil price, exchange rate and the Kuala Lumpur Composite Index (KLCI) based on the theory of wavelets on the basis of monthly data from the period January 1990 – December 2012. This methodology enables us to identify that the causality between these economic variables at different time intervals. This wavelet decomposition also provides additional evidence to the “reverse causality” theory. We found that the wavelet cross-correlations between stock price and exchange rate skewed to the right at all levels with negative significant correlations which implies that the exchange rate leads the stock price. In the case of stock and commodity prices, there is no significant wavelet-cross-correlation at first four levels. However, the wavelet cross-correlations skewed to the left at level 5 which implies that the stock price leads commodity price in the long-run. Finally, there is no significant wavelet cross-correlations at all levels as long as we concern between commodity price and exchange rate. It implies that there is no lead-lag relationship between commodity price and exchange rate.
Keywords: Stock Price, Commodity Price, Exchange Rate, Wavelet Cross-Correlation
Characteristics of the Commercial Sex Market in Thailand: A Microeconomics Investigation
The market for commercial sex is in fact just like any other market characterized by demand, supply, and price. The market exists in almost every country, and different types have different market structures. In Thailand, the economic structure of the commercial sex market is rather complicated and there is need for a methodological or scientific approach to help better our understanding. This paper aims to provide a working taxonomy appropriate to the commercial sex market for Thailand. Both primary data (survey and interview) and secondary data based on microeconomic analysis are used to describe the market forces behind Thai’s commercial sex markets. We discuss the demand and supply conditions to see what kind of market structure best suits Thailand’s case. Because the commercial sex market in Thailand is not homogeneous, we categorized the market into sub-markets according to demand and supply characteristics and then justify the kind of market structure and equilibrium for each. For the analytical results, this paper provides many cases and details, for example, the monopoly position and price discrimination practice of brothel, and the oligopoly position in massage parlors, which contrast with the online market that is closer to the perfect competitive model with large number of agents as well as free entry or exit. We hope that an objective take on Thai’s commercial sex market grounded on microeconomics will clear many myths and unfounded issues usually associated with this market.
Keywords: Demand and Supply of Commercial Sex, Sex Workers, Industrial Organization Model
Overall Revealed Comparative Advantages
This paper offers a new approach to the measurement of revealed comparative advantages, respectively, the specialization of exports, in addition to the classical approaches of Bella Balassa and Thomas Vollrath. The proposed approach aims to summarize the divergent expression of comparative advantages by commodity groups and countries and to arrive at the general pattern of export specialization. The conclusion is drawn that the contemporary international trade is characterized by asymmetric specialization of exports. This is reflected in the specialization of a large group of countries in the export of lower-processed products and vice versa, a small group of countries specialized in the export of highly-processed products.
Keywords: Revealed Comparative Advantages, Specialization, International Trade
Aksemsettin Mah. Kocasinan Cad.
Erenoglu Is Merkezi
Fatih – Istanbul, TURKEY
Email: [email protected]
This work is licensed under a Creative Commons Attribution 4.0 International License.