Growth in the last quarter of 2012 was shockingly fast. But for every action, etc. etc. Growth in 1Q2013 was shocking too, but in the opposite direction (log annual changes; log quarterly changes, SAAR):
The annual growth number fell from a revised 6.5% in 4Q2012 to 4.1% in 1Q2013 (4.0% in log terms). This was actually a little lower than forecast by my IPI based model – for once, it wasn’t being overly pessimistic – but is still respectable growth, and not bad compared to our regional peers.
I have to admit I read these twin papers with a smirk on my face (abstracts):
Isolated Capital Cities and Misgovernance: Theory and Evidence
Filipe R. Campante, Quoc-Anh Do, Bernardo V. GuimaraesMotivated by a novel stylized fact – countries with isolated capital cities display worse quality of governance – we provide a framework of endogenous institutional choice based on the idea that elites are constrained by the threat of rebellion, and that this threat is rendered less effective by distance from the seat of political power. In established democracies, the threat of insurgencies is not a binding constraint, and the model predicts no correlation between isolated capitals and misgovernance. In contrast, a correlation emerges in equilibrium in the case of autocracies. Causality runs both ways: broader power sharing (associated with better governance) means that any rents have to be shared more broadly, hence the elite has less of an incentive to protect its position by isolating the capital city; conversely, a more isolated capital city allows the elite to appropriate a larger share of output, so the costs of better governance for the elite, in terms of rents that would have to be shared, are larger. We show evidence that this pattern holds true robustly in the data. We also show that isolated capitals are associated with less power sharing, a larger income premium enjoyed by capital city inhabitants, and lower levels of military spending by ruling elites, as predicted by the theory.
Isolated Capital Cities, Accountability and Corruption: Evidence from US States
We show that isolated capital cities are robustly associated with greater levels of corruption across US states, in line with the view that this isolation reduces accountability, and in contrast with the alternative hypothesis that it might forestall political capture. We then provide direct evidence that the spatial distribution of population relative to the capital affects different accountability mechanisms over state politics: newspaper coverage, voter knowledge and information, and turnout. We also find evidence against the capture hypothesis: isolated capitals are associated with more money in state-level campaigns. Finally, we show that isolation is linked with worse public good provision.
Filipe R. Campante, Quoc-Anh Do
I don’t need to spell it out, do I?
Technical Notes
Campante, Filipe R. and Quoc-Anh Do & Bernardo V. Guimaraes, "Isolated Capital Cities and Misgovernance: Theory and Evidence", NBER Working Paper No. 19028, May 2013
Campante, Filipe R. and Quoc-Anh Do, "Isolated Capital Cities, Accountability and Corruption: Evidence from US States", NBER Working Paper No. 19027, May 2013
Apropos of the Monetary Policy Committee Meeting last week, monetary conditions in Malaysia for 2013 up to March mirror developments in prices and incomes (log annual and monthly changes; seasonally adjusted):
I'm quoting more than I usually do, because there are quite a number of fallacies to be addressed here (excerpt):
Rising tides of currencies globally
By DATUK ALAN TONGA PACKET of nasi lemak (rice cooked in coconut milk) with a fried egg costs around RM2 nowadays. I remember getting a similar packet (and in bigger portion) at RM1 ten years ago. It is a 100% price appreciation in ten years! My friends and I were jokingly saying that nasi lemak would be a good investment tool if it can be kept for ten years...
…The global economies have been embarking on expansionary monetary policies since the financial crisis broke out in 2008. Central banks around the world are printing money to support their economies and increase exports, with the United States as the primary instigator.
This will probably be useful to somebody (abstract):
The Global Energy Outlook
Richard G. Newell, Stuart IlerWe explore the principal trends that are shaping the future landscape of energy supply, demand, and trade. We take a long-term view, assessing trends on the time scale of a generation by looking 25 years into the past, taking stock of the current situation, and projecting 25 years into the future. We view these market, technology, and policy trends at a global scale, as well as assess the key regional dynamics that are substantially altering the energy scene. The shift from West to East in the locus of energy growth and the turnaround of North American gas and oil production are the most pronounced of these currents. Key uncertainties include the strength of economic and population growth in emerging economies, the stringency of future actions to reduce carbon emissions, the magnitude of unconventional natural gas and oil development in non-OPEC countries, and the stability of OPEC oil supplies.
The latest IPI data shows production growth bouncing back (log annual and monthly changes; seasonally adjusted; 2000=100):
Ho-hum (excerpt)
At the Monetary Policy Committee (MPC) meeting today, Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR) at 3.00 percent.
The global growth momentum has continued to be modest. Latest economic data suggests that the recovery is uneven while downside risks to global growth prospects remain…
…In the Malaysian economy, while the external sector is affected by global developments, domestic demand has continued to provide support to growth…
…Inflation remained low at 1.5% in the first quarter. While inflation is expected to continue to rise during the year, it is projected to remain modest…Nevertheless, given the modest global growth prospects, pressures from global commodity prices are likely to be contained…
*Sigh*
16% TAX AFTER BN FORMING FEDERAL GOVERNMENT - RAKYAT BEEN VICTIMISED AGAIN!!!
After taking control of the Federal government after a controversial "fraud" victory , BN/UMNO Federal Government has already started imposing hardship on the poor Malaysian rakyat.
The above shows a tax of 16% being imposed (service tax - 10% and GST of 6%) on the rakyat.
Malaysians don't deserve this!!!! BUT the fault lies on some Malaysian voters who had been carried away by favors and goodies to vote for the "uncaring, corrupt and ineffective" BN/UMNO.
I linked to the site as a matter of course as it’s internet etiquette, but personally I wouldn’t recommend visiting – too many pop-ups and pop-unders.
The growth numbers look pretty bad, but truth be told, exports are just in a holding pattern (log annual and monthly changes; seasonally adjusted):
Exports fell an annual 3,2% in log terms in March, and 5.2% from February. Imports were a little better, expanding 6.4% from last year and shrinking 0.6% from February.
What with all the election news, how many caught this article on Singapore’s crackdown? (excerpt)
Banks in Singapore agonize over rich clients in tax evasion clampdown
The authorities are keen to ensure the city-state is not seen as a tax haven for the wealthy from Europe, China, Indonesia, Malaysia and elsewhere without dulling its allure as an oasis for the rich, replete with casinos, luxury properties and high-end boutiques and restaurants. More than 70 percent of Singapore's S$1.34 trillion ($1.08 trillion) in assets under management at the end of 2011 came from overseas, an MAS survey showed.
Now that the general election is over – pending, of course, the inevitable legal review – it’s time to get back to stuff that actually matters.
For the record, polling was peaceful, orderly and generally well conducted where I voted. The queues were a little long, especially for the higher numbered streams, but people mostly took this patiently in stride. EC officials kindly helped my mother into the station (she’s wheel-chair bound), jumping the queue in the process. That was a relief, especially in the mid-morning heat. Kudos to them.
I hope your election day was just as uneventful and peaceful, and I fervently pray it stays that way.
I keep hearing some people talking about the GDP deflator as if its a measure of consumer inflation. That it’s a measure of inflation is indisputable – that it measures domestic consumer inflation is not.
In that respect, the consumer price index – which directly measures price changes of consumption goods and services – is a much better measure.
Posts
All Comments
