econews - nus · jan 2008 3 econews the department of economics seminars series is usually held on...

SCAPE

ECONewsNewsletter of the Department of Economics July 2001Newsletter of the Department of Economics January 2008

CONTENTS

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CONTENTS

EDITORIAL TEAM OF

Dr Vijayakala Seevaratnam

Ms Salinah Zuber

TH

IS IS

SU

E

Website: http://nt2.fas.nus.edu.sg/ecs/

All Rights Reserved.The contents of this publication are correct at the time

of printing, and may be subject to change withoutprior notice.

Singapore Economic Policy Conference2007 ------------------------------------- 1-2

Staff Activities -------------------------------- 2

Department Seminars ----------------------- 3

Industrial Organization Workshops ------ 4

Micro-Group Meetings ---------------------- 4

Graduate Thesis Topics ---------------------- 5

Macroeconomics & Monetary EconomicsBrown Bag Workshops ------------------- 6

The First Singapore Economic TheoryWorkshop (SET 2007) -------------------- 6

Conference Papers Presented byStaff Members ------------------------- 7-9

Singapore Centre for Applied &Policy Economics (SCAPE) ------ 10-13

Staff Publications ------------------- 14-17

IV Asian General Equilibrium TheoryWorkshop (GETA 2007) --------------- 17

NUS Economics Alumni ------------------ 18

Stay in Touch ------------------------------- 19

NUS Economics Society (ENS) ---------- 20

continued on page 2

The inaugural Singapore Economic PolicyConference organised by the SingaporeCentre for Applied and Policy Economics

(SCAPE), Department of Economics, NUS, washeld on 18 October 2007 at the Four SeasonsHotel.

The objective of the Conference was to bringtogether academics and practitioners in thepublic and private sectors to discuss topicalsubjects pertinent to the Singapore economy,and through such dialogue, to foster a betterunderstanding of the issues involved.

The programme for the conference featureda strong line-up of speakers and a wide rangeof topics. The Conference was opened byProfessor Tan Eng Chye, Deputy President(Academic) and Provost of NUS. Subsequentspeakers hailed not just from academia but also from the public and privatesectors, and are experts or leading practitioners in their respective fields. Broadly,the presentations in the morning of the one-day Conference dealt with the ever-relevant issue of how Singapore could continue to expand the size of its economicpie, while the afternoon sessions focused on this as well as issues pertaining tothe distribution of the pie.

The first presentation was by Assoc Prof Tilak Abeysinghe, Deputy Director, SCAPE.He focused on the booming property market in Singapore and its impact on thebroader economy. He also presented short to medium-term economic growthforecasts for Singapore. Mr. Sum Yee Loong, Tax Partner, Deloitte and Touchethen discussed the key global trends in corporate tax rates, and what Singaporecould do to attract direct investments in an era of intense global competition forcapital. The last session of the morning was by Mr. Wong Keng Siong, Vice-President, Group Risk, Country Risk Management, DBS Bank, who discussed, froma practitioner’s point of view, how we could best manage the risks arising fromvolatility in the financial markets. Interesting insights were also provided by Mr.Yeong Wai Cheong, Group Managing Director and CEO of the Konzen Group,and an experienced financial practitioner, who chaired this session.

After lunch, the discussion turned to some of the most pressing socio-economicchallenges facing Singapore today. These included the declining fertility rate, arapidly ageing population, and the widening income gap. Assoc Prof AngeliqueChan, Department of Sociology, NUS, started the afternoon’s discussion by takinga close look at the trends and issues relating to fertility, migration and the labour

Provost delivering openingaddress.

SINGAPORE ECONOMIC POLICYCONFERENCE 200718 OCTOBER 2007

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market in Singapore. Assoc Prof Albert Tsui, Departmentof Economics, NUS then went on to present estimates ofhow the interest rate for the CPF Special, Medisave andRetirement Accounts (SMRA) could change under thenew method of pegging the SMRA rate to the yield on10-year Singapore Government Securities. Given longerlife expectancies, Assoc Prof Tsui also assessed the extentto which the elderly would be able to meet theirretirement financial needs from their CPF savings undervarious expenditure and retirement scenarios.

To round up the conference, a panel comprising MadamHalimah Yacob, Member of Parliament for Jurong GRCand Assistant Secretary-General of NTUC, and Ms ViviZainol, Lecturer, School of Interdisciplinary Studies, NgeeAnn Polytechnic tackled the important issue of how oursocial safety net could help to ensure that the mostvulnerable segments of our population would not beleft behind even as our economy continues to grow.Madam Halimah also elaborated on the initiatives byNTUC to help older workers, contract and casual workers,low wage and structurally-unemployed workers, as wellas women workers.

Overall, the conference was marked by lively exchangesof views between the participants and speakers. Theconference was attended by around 80 participants fromvarious ministries, statutory agencies and the privatesector, as well as the academia and the media. Highlightsof the conference were featured on TV and the pressthe same evening and the following day.

Discussion on Singapore’s social safety net by (from left) MadamHalimah Yacob, Prof Basant Kapur (chairman) and Ms ViviZainol.

Assoc Prof Chia Ngee Choon has been appointed amember of the National Longevity Insurance Committee(NLIC). The NLIC was formed in September 2007 to studyand recommend to the Government, the best way toimplement a National Longevity Insurance Scheme.Professor Lim Pin, who is the Chairman of the NationalWages Council, chairs this committee. The report isexpected to be completed by March 2008.

Dr Han Hee Joon was appointed as a member of theResearch Committee of the NUS Risk ManagementInstitute in 2007.

Assoc Prof Albert Hu was invited as a discussant to aWorld Intellectual Property Organization (WIPO)Roundtable on the Economics of Intellectual Propertyheld in Geneva, Switzerland, 26-27 November 2007. Hisresearch on knowledge flow in East Asia was featuredin an International Herald Tribune article, “Turning theTide on Knowledge Flows,” 26 November 2007.

Dr Vijayakala Seevaratnam served as a member of theOrganising Committee for the 2007 Global Maritime andIntermodal Logistics Conference. She also served as aChair for the Panel Discussion on ‘Safety and Security

STAFF ACTIVITIESIssues in Shipping and Ports’ at the Industry Workshopon Asia-Pacific Shipping and Ports – 2008 and Beyond,at the Holiday Inn Atrium, Singapore on 18 December2007.

Professor Sun Yeneng gave a seminar talk on 27November 2007 while visiting the University of Illinoisat Urbana-Champaign, USA.

Assoc Prof Xiao Luo served as the Program CommitteeChair of the 2007 Joint Conference in Game Theory andDecentralization, Taipei, Taiwan. He was also a ProgramCommittee Member of the 4th Asian General Equilibrium(GETA 2007), NUS, Singapore.

Assoc Prof Julian Wright was an Invited Speaker at the‘2007 Australasian Meeting of the Econometric Society’held between 3 and 6 July 2007 and presented a talktitled “Recent Developments in Two-Sided Markets”. Hewas also a discussant for the talk by Professor Rochettitled “Competing Payment Systems - Insights from theLiterature” at the ‘Payments System Review Conference’held in Sydney on 29 November 2007 (the Reserve Bankof Australia co-hosted the conference with MelbourneBusiness School).

Conference was well-attended by participants from the publicand private sectors, academia and the media.

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The Department of Economics Seminars Series is usually held on Tuesdays and Thursdays, from 4.00 pm - 5.30 pm.

Semester I, Academic Year 2007/2008

DEPARTMENT SEMINARS

Presenter

Professor Aloysius SiowUniversity of Toronto

Dr Aamir R. HashmiNational University of Singapore

Professor Jean-Marc BonnisseauUniversité Paris 1

Professor Masaki AoyagiOsaka University

Professor Jinwoo KimYonsei University

Professor Asher WolinskyNorthwestern University

Dr Lixin Colin XuWorld Bank

Professor Kamal SaggiSouthern Methodist University

Dr Guillaume RocheteauNational University of Singapore

Assoc Prof John StachurskiKyoto University

Professor Andrea IchinoUniversita’ di Bologna

Assoc Prof Murali K. AgastyaNational University of Singapore

Professor Olivier CompteCERAS, Ecole Nationale des Ponts etChaussées

Professor Russell CooperUniversity of Texas at Austin

Dr Dmitriy KvasovUniversity of Auckland

Professor Jean-Charles RochetUniversité Toulouse 1

Professor Taiji FurusawaHitotsubashi University

Topic

Marriage Matching, Risk Sharing and SpousalLabor Supplies

Market Structure and Innovation: A DynamicAnalysis of the Global Automobile Industry

General Equilibrium Theory and IncreasingReturns: An Alternative to the SurvivalAssumption

Optimal Sales Schemes against InterdependentBuyers

Optimal Collusion-Proof Auctions

Search with Asymmetric Information

Institutions and Foreign Direct Investment: Chinaversus the Rest of the World

Bilateralism, Pure Multilateralism, and the Questfor Global Free Trade- Joint with SCAPE

Crashes and Recoveries in Illiquid Markets

Equilibrium Storage with Multiple Commodities

College Cost and Time to Complete a Degree:Evidence from Tuition Discontinuities

Continuing Wars of Attrition

Bargaining and Majority Rules: A CollectiveSearch Perspective

Is it is or is it Ain’t my Obligation? Regional Debtin a Fiscal Federation

U-Boats

Accident Risk, Limited Liability and DynamicMoral Hazard

A Factor Proportions Theory of Endogenous FirmHeterogeneity

Date

7 August 2007

23 August 2007

30 August 2007

6 September 2007

20 September 2007

25 September 2007

27 September 2007

9 October 2007

11 October 2007

16 October 2007

25 October 2007

30 October 2007

1 November 2007

6 November 2007

15 November 2007

27 November 2007

29 November 2007

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Co-ordinator : Assoc Prof Julian Wright

Website : http://nt2.fas.nus.edu.sg/ecs/res/io_2007.asp


Speaker(s)

Professor Ivan PngDepartment of Information Systems,Business Policy & EconomicsNational University of Singapore

Dr Huang Ke-WeiDepartment of Information Systems &EconomicsNational University of Singapore

Assoc Prof Murali AgastyaDepartment of EconomicsNational University of Singapore

Dr Fu QiangDepartment of Business PolicyNational University of Singapore

Title

Copyright Law and Movie Production:The European Rental Directive

Monopoly Pricing and MaximizingShareholder’s Wealth

Access and Veto Rights and the Nature of theFirm

The Beauty of “Bigness”: Merging or Splitting

Date

10 August 2007

31 August 2007

21 September 2007

2 November 2007

INDUSTRIAL ORGANIZATION WORKSHOPS

Co-ordinator : Assoc Prof Indranil Chakraborty

Website : http://nt2.fas.nus.edu.sg/ecs/res/micro_2007-I.asp


Speaker

Dr Aggey SemenovDepartment of EconomicsNational University of Singapore

Dr Arkadii SlinkoUniversity of Auckland

Professor Joseph OstroyUniversity of California, Los Angeles

Professor Parkash ChanderDepartment of EconomicsNational University of Singapore

Title

Bargaining in the AppointmentProcess, Constrained Delegation andthe Political Weight of the Senate

Proportional Representation andStrategic Voters

Decentralized Knowledge, InternalOrganization, and the Limits of thePrice System

Coalitional Equilibria

Date

1 October 2007

5 November 2007

9 November 2007

30 November 2007

MICRO-GROUP MEETINGS

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The following graduate students of the Department were conferred degrees between 1 July 2007 and 31December 2007.

PhD

Student

Chung Wee-Wee, Connie Elizabeth

Eni Vimaladewi

Gurpreet Singh Bhatia

Subhashini Muthukrishnan

Zheng Yi

Topic

Banking Reforms in the TransitionalEconomy of China

Essays on Portfolio Optimization andManagement Using BootstrappingMethod: The Case of Bank Indonesia

Essays on Services Industries:The Efficiency Measurement

Quality Differentiation andConsumer Choice

Essays on Financial Market Linkagesin East Asian Countries

Supervisor(s)

Assoc Prof Jose Tongzon

Professor Tse Yiu Kuen

Assoc Prof Shandre M ThangaveluAssoc Prof Zeng Jinli

Professor Parkash Chander

Assoc Prof Wong Wing Keung

GRADUATE THESIS TOPICS

M. SOC. SCI. by Research

Student

Cheng Rui

Cheong Ji-nin

Choong Soo Yuen

Huang Jingying

Topic

Execution Costs in China Stock Market

Evaluating the Australian ICT InputSubstitution and Productivity Effects

The Hub-And-Spokes Effects of Singapore’sOverlapping Free Trade Agreements: A CGEAnalysis Using GTAP

Free Entry and Social Welfare

Supervisor(s)

Assoc Prof Wong Wing Keung

Assoc Prof Shandre M Thangavelu

Dr Hur Jung

Assoc Prof Julian Wright

Congratulations and Good WishesProfessor Zhang Jie on his promotion to fullProfessorship with retrospective effect from 1 July2007!

Assoc Prof Indranil Chakraborty on his award oftenure with retrospective effect from 1 July 2007!

Assoc Prof Liu Haoming on his promotion withtenure to Associate Professorship with effect from 1January 2008!

Assoc Prof Julian Wright on his award of tenurewith retrospective effect from 1 January 2008!

Dr Wong Wei Kang won the Faculty ExcellentTeacher Award 2006/2007! The Faculty sets a veryhigh store by the quality of the education it offers.The awards are given in recognition of the work andsuccess of our most dedicated teachers in the Faculty.

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Speaker

Dr Tarek CouryUniversity of Oxford

Dr Guillaume RocheteauDepartment of EconomicsNational University of Singapore

Title

Monetary Delegation and Commitmentto an Optimal Policy

Money and Competing Assets under PrivateInformation

Date

24 October 2007

21 November 2007

MACROECONOMICS & MONETARY ECONOMICSBROWN BAG WORKSHOPSCo-ordinator : Assoc Prof Aditya Goenka

Website : http://nt2.fas.nus.edu.sg/ecs/res/bb.asp


The FirstS i n g a p o r eE c o n o m i c

Theory Workshop(SET 2007) wasorganized by theDepartment ofEconomics at theNational Universityof Singapore on 16-17 August 2007, inthe NUS campus.

The workshop is part of the effort to bring theDepartment to the forefront of research activities ineconomic theory. The SET Workshops are to be an annualevent. They will allow participants to present and beinformed about the latest developments in economictheory – broadly defined. This year, papers presented inSET are eligible for the Special Issue of the Journal ofMathematical Economics devoted to conferences ingeneral equilibrium.

John Ledyard (Caltech) and Stephen Morris (Princeton)were the two plenary speakers at the SET workshop.Invited speakers included Jeff Ely (Northwestern), RodGarratt (Santa Barbara), Akihiko Matsui (Tokyo), WingSuen (Hong Kong) and Rabee Tourky (Queensland).Twenty-one papers on different areas of economic theorywere presented over two days. The organizingcommittee consisted of Professor Parkash Chander(Chair), Assoc Prof Indranil Chakraborty, Assoc ProfAditya Goenka and Professor Sun Yeneng.

THE FIRST SINGAPORE ECONOMIC THEORYWORKSHOP (SET 2007)16-17 AUGUST 2007

Professor Parkash Chander givingthe welcome address. Audience at SET 2007 Workshop.

Professors BernardCornet, Stephen Morrisand Parkash Chander atconference dinner (L-R).

Professors John Ledyard, John Geanakoplosand Bernard Cornet at conference dinner (L-R).

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CONFERENCE PAPERS PRESENTED BYSTAFF MEMBERS

Conference papers presented by our staff members between 1 July 2007 and 31 December 2007 are givenbelow.

Name

Assoc Prof Xiao Luo

Assoc Prof Julian Wright

Dr Yohanes Eko Riyanto

Dr Hur Jung

Dr Lu Jingfeng

Dr Cheolbeom Park

Dr Lin Mau-Ting


Assoc Prof Chia Ngee Choon

Dr Sarah Tong Yueting

Dr Cheolbeom Park

Dr Lu Jingfeng

Title of Conference

Conference on CurrentTrends in Economics2007 (SAET 2007)

Australasian Meeting ofthe Econometric Society2007

Australasian Meeting ofthe Econometric Society2007

Asia Pacific TradeSeminars (APTS) 2007

International GameTheory Conference

Far Eastern Meeting ofthe Econometric Society2007



15th AustralianColloquium ofSuperannuation

Chinese EconomicSociety

Singapore EconomicReview Conference2007 (SERC)


Title of Paper

Bayesian CoalitionalRationalizability

Recent Developmentsin Two-Sided Markets

Harmful Monitoring

Labor-ManagementBargaining, LaborStandards andInternational Rivalry

Auction Design withOpportunity Cost

When Does theDividend-Price RatioPredict Stock Returns?

Inflation, Output andPrice AdjustmentProbability in a CalvoPricing Model

Read My Lips: TheCase against ElectionPromises

Central ProvidentFund-InvestmentScheme in Singapore:A PreliminaryComparison of Returns

Foreign Investmentand OwnershipTransformation ofChina’s SOEs

When Does theDividend-Price RatioPredict Stock Returns?

Private Provision of aDiscrete Public Goodwith VoluntaryParticipation

Venue

Kos, Greece

The University ofQueensland,Brisbane, Australia

The University ofQueensland,Brisbane, Australia

Shanghai Universityof Finance andEconomics,Shanghai, China

Stony Brook, USA

Institute ofEconomics,Academia Sinica,Taipei, Taiwan



University of NewSouth Wales, Sydney,Australia

Hunan University,Changsha, China

Meritus Mandarin,Singapore


Date

18-24 June2007

3-6 July2007

3-6 July2007

7-8 July2007

9-13 July2007

11-13 July2007

11-13 July2007

11-13 July2007

19-20 July2007

26-30 July2007

2-4 August2007

2-4 August2007

continued on page 8

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Dr Wong Wei Kang

Assoc Prof Aditya Goenka


Professor Sun Yeneng

Assoc Prof Xiao Luo

Dr Lu Jingfeng

Professor Basant K. Kapur

Assoc Prof Xiao Luo

Assoc Prof Aditya Goenka

Dr Cheolbeom Park




Workshop onMacroeconomicDynamics

The First SingaporeEconomic TheoryWorkshop (SET 2007)




IV Asian GeneralEquilibrium TheoryWorkshop (GETA 2007)



European Meeting ofthe Econometric Society2007 (EEA/ESEM)

Joint Conference inGame Theory andDecentralization 2007

Does CapitalRequirement InduceBanks to Limit Risk-Taking? Evidence fromIndonesia

To Trade or Not toTrade: The EndowmentEffect andManipulations of theReference State

Infectious Diseases andEndogenousFluctuations

Green Consumerismand Collective Action

Cancellation ofIndividual Risks andFubini Extension: ACompleteCharacterization

Bayesian CoalitionalRationalizability

Coordination in Entryand Auction Designwith Private-Information -Acquisition Costs ofValuation Discovery

Progressive Services,AsymptoticallyStagnant Services, andManufacturing:Structural Change andEndogenous Growthwith PartiallyOverlapping VarietySets and Non-HomotheticPreferences

Belief Operator in aUniversal Space

Communicable Diseasesand Economic Growth

The Impact of Oil PriceShocks on the US StockMarket

Coalitional Equilibria



Adelaide, Australia

National Universityof Singapore







Budapest, Hungary

Academia Sinica,Taipei, Taiwan

2-4 August2007

2-4 August2007

11-12August 2007

16-17August 2007

16-17August 2007

16-17August 2007

16-17August 2007

18-19August 2007

18-19August 2007

18-19August 2007

27-31August 2007

19-22October2007

continued from page 7

continued on page 9

Name Title of Conference Title of Paper Venue Date

Name Title of Conference Title of Paper Venue Date

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Professor Sun Yeneng

Assoc Prof Murali Agastya

Assoc Prof Xiao Luo

Assoc Prof Liu Haoming

Dr Aamir Rafique Hashmi

Dr Wong Wei Kang

Dr Cheolsung Park

Dr Han Hee Joon

Dr Vijayakala Seevaratnamand Assoc Prof K.Raguraman





2007 InternationalSymposium onContemporary LaborEconomics

The All China Economics(ACE) InternationalConference

The All China Economics(ACE) InternationalConference

Asian Conference 2007on AppliedMicroeconomics/Econometrics

18th Annual EC2(European Conferencesof the EconometricsCommunity) Conferenceon Advanced TimeSeries Econometrics

Global Maritime andIntermodal Logistics2007

InternationalConference onComparativeDevelopment- In celebration of thePlatinum Jubilee of theIndian StatisticalInstitute

Cancellation ofIndividual Risks andFubini Extension: ACompleteCharacterization

On Choice in aComplex Environment

Epistemic Foundationof Bayesian c-Rationalizability

Is There a Quality-Quantity Tradeoff?Evidence from theRelaxation of China’sOne Child Policy

Intangible Capital,Barriers to TechnologyAdoption and CrossCountry IncomeDifferences

The Political Economyof Housing Prices: AnEmpirical Investigation

Effect of Sibship Sizeand Birth Order onEducation in aSubsistence LevelEconomy: Evidencefrom Rural Bangladesh

GARCH Process withPersistent Covariates

Recent Trends andDevelopments in ShipRegistration

Climate Change andthe Kyoto Protocol




Xiamen University,China

City University,Hong Kong

City University,Hong Kong

Korea University,Seoul, Korea

Faro, Portugal

Holiday Inn Atrium,Singapore

Indian StatisticalInstitute, New Delhi,India

19-22October2007

19-22October2007

19-22October2007

8-9December2007

12-14December2007

12-14December2007

14-15December2007

14-15December2007

17-19December2007

18-20December2007


Jan 2008

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SINGAPORE CENTRE FOR APPLIEDAND POLICY ECONOMICS

The period July – December 2007 was a very busyone for SCAPE. In addition to the SingaporeEconomic Policy Conference (please see cover

story on page 1), the following are the activitiesundertaken by SCAPE in this six-month period, inapproximate chronological order.

Workshop on “Discrete ChoiceModelling”3-5 July 2007The workshop was conducted by Professor DavidHensher, Director, Institute of Transport and LogisticsStudies (ITLS) and Associate Dean, Faculty ofEconomics and Business, University of Sydney, andDr. John Rose, Lecturer, ITLS. It was jointly organisedwith the Ministry of Trade and Industry, Singapore(MTI) and the Land Transport Authority, Singapore(LTA).

SCAPE Public Lecture on “Developing aService Quality Index (SQI): A Case Studyin the Provision of Bus Services”4 July 2007By Professor David Hensher, University of Sydney

The Claremont-Bologna-SCAPEInternational Economic Policy Forum200730-31 July 2007

SCAPE—collaborating with the Claremont McKennaCollege and the Johns Hopkins University School ofAdvanced International Studies, Bologna Center—launched the annual Claremont-Bologna-SCAPEInternational Economic Policy Forum with a two-daysymposium at the National University of Singaporeon 30 and 31 July 2007.

This inaugural forum’s theme was “Capital FlowsFinancial Markets and Economic Integration in Asia”,which was discussed in six sessions comprising a dozenpapers by about thirty invited speakers andparticipants. The speakers at the forum includedProfessor Barry Eichengreen, University of California-Berkeley; Professor Dominick Salvatore, FordhamUniversity; Professor Tom Willett, Claremont College;Professor Sven Arndt, Claremont McKenna College;Dr. Khor Hoe Ee of the Monetary Authority ofSingapore and Professor Michael Plummer, SAIS-Bologna. The workshop was partially sponsored bythe Ministry of Trade and Industry, Singapore (MTI).

On the first day, the speakers focused on Asia’sexchange rate regime, international reserves,monetary policies and capital flows. On the secondday, they took on the issues of monetary and financialcooperation in Asia, i.e., optimum currency areas,exchange rate and monetary policy coordination.

SCAPE Public Lecture by Professor BarryEichengreen31 July 2007

As a keynote addressto the Claremont-B o l o g n a - S C A P EI n t e r n a t i o n a lEconomic PolicyForum 2007,Professor BarryEichengreen of theUniversity ofCalifornia atBerkeley presentedhis views onc o r p o r a t e

governance in Asia ten years after the 1997/98financial crises in a public lecture on 31 July 2007.

He showed that institutional reforms in Asia havebeen unsatisfactory. Therefore, despite all the effortsto protect the region against instability, we cannotrule out financial crisis in the near future. He alsoargued that China today is like the US in the 19th

century: it is a booming economy plagued byexuberant investors, weak institutions, and a fragilefinancial system, which can always turn to bust. Hehighlighted this comparison asserting that “whenChina sneezes, the rest of Asia can catch pneumonia”.

Professor Eichengreen is the George C. Pardee andHelen N. Pardee Professor of Economics and Professorof Political Science at the University of California,Berkeley. He is also Research Associate of the NationalBureau of Economic Research, Research Fellow of theCentre for Economic Policy Research, andInternational Research Fellow of the Kiel Institute ofWorld Economics. He has published articles inAmerican Economic Review, European EconomicReview, Journal of Development Economics, Journalof Economic Literature, Journal of EconomicPerspectives, Journal of International Economics,Journal of Money, Credit and Banking, and manyothers. His recent books include the EuropeanEconomy since 1945: Coordinated Capitalism and

SCAPE

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Beyond (Princeton University Press, 2007), Toward an EastAsian Exchange Regime, co-edited with Duck-Koo Chung(Brookings Institution Press, 2007), and GlobalImbalances and the Lessons of Bretton Woods (MIT Press,2006).

SCAPE POLICY FORUM SERIES

The Inaugural SCAPE Policy Forum on“Climate Change and the Kyoto Protocol”29 August 2007

During this period, SCAPE was also pleased to launch aPolicy Forum Series. This will be a continuing series ofpublic lectures and talks by prominent academics and

experts on economicissues of wide currentinterest. The aim ofthis series is tostimulate a widerdiscussion anddialogue betweenacademics andinterested individualsfrom the public andprivate sectors.

Professor ParkashChander, Head,Department ofEconomics, NUS,inaugurated this serieswith a talk on “ClimateChange and the KyotoP r o t o c o l ” . G l o b a l

climate change and the appropriate policy responses toit are subjects of immense policy significance, andProfessor Chander has in recent years been activelyresearching the issues at stake in the currentinternational negotiations on climate change.

During his presentation, Professor Chanderrecommended support for climate change agreementslike the Kyoto Protocol and trade in emissions. Countriesshould consider developing institutions and marketswhich facilitate trade in pollution permits and cleaneror more energy-efficient technologies.

The forum was well-attended by interested individualsfrom outside and within the University. An informalreception followed the forum.

Subsequent policy forums have included the following.

“Overlapping Free Trade Agreements ofSingapore”11 September 2007The speakers were Assistant Professor Jung Hur and Mr.Chong Soo Yuen, Department of Economics, NUS.

“Projecting the Growth of Potential Output:Applying the Lessons of Growth Theory andGrowth Accounting”18 September 2007The speaker was Professor Nicholas Oulton, SeniorVisiting Research Fellow at the Centre for EconomicPerformance of the London School of Economics andVisiting Professor, University College London.

“Bilateralism, Pure Multilateralism and theQuest for Global Free Trade”9 October 2007The speaker was Professor Kamal Saggi, SouthernMethodist UniversityThe forum was jointly organised with the Departmentof Economics.

“Monetary Policy Challenges in aFinancially Liberalised Environment: TheIndian Experience”10 October 2007The speaker was Professor Dilip. M. Nachane, VisitingSenior Research Fellow, Institute of South Asian Studies(ISAS). This forum was jointly organised by SCAPE andISAS.

Planned speakers at future policy forums include AssocProf Albert Guangzhou Hu (Knowledge Flow in East Asiaand Beyond), Assoc Prof Chia Ngee Choon (GenerationalAccounting for Singapore), and Assoc Prof Julian Wright(Net Neutrality).

The SCAPE-EABER Workshop on Intra-AsiaTrade and Factor Flows: Trends,Determinants and Implications8-9 October 2007

The Singapore Centre for Applied and Policy Economics(SCAPE), Department of Economics, NUS, co-organisedthe SCAPE-EABER Workshop, held at the NUS ShawBuilding, with the East-Asian Bureau of EconomicResearch (EABER), Australian National University andthe Ministry of Trade and Industry, Singapore (MTI). The

Professor Parkash Chander,Head of NUS Department ofEconomics.

continued on page 12

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Guest-of-Honour,who delivered theOpening Address,was Mr. Ravi Menon,Second PermanentSecretary of theMinistry of Trade andIndustry, Singapore(MTI).

The one-and-a-halfday workshopfeatured expertspresenting theirresearch findings onintraregional equityand debt flows, labour flows, services trade, andtechnology and trade flows in Asia. Speakers were fromthe International Monetary Fund, the Bank ofInternational Settlements, the Asian Development BankInstitute, the Hong Kong Monetary Authority, anduniversities and research institutes in the region. Ninepapers were presented in total, and thirty institutionsparticipated in the workshop. Some of the interestingpapers presented included “Can Japan Dance withIndia?” by Shigeyuki Abe (Doshisha University), “WhyDo They Patent in China?” by Albert Hu (NUS) and“Determinants of International Bank Lending from theDeveloped World to East Asia” by Reza Siregar (IMF -Singapore Regional Training Institute and University ofAdelaide) and Choy Keen Meng (Nanyang TechnologicalUniversity). The event concluded with a panel discussionon regional integration.

The workshop was well-attended by interestedindividuals from outside and within the University, andvaluable comments were received from the inviteddiscussants and audience.

SCAPE Public Lecture by Professor MarioMonti23 October 2007

In a SCAPE PublicLecture on 23 October2007, co-organised withthe Embassy of Italy, theEuropean CommissionDelegation toSingapore, and theSingapore Academy ofLaw, Professor MarioMonti, President ofBocconi University andthe former EuropeanUnion Commissioner ofCompetition, spoke on‘Competition Policies inthe EU’.

Comparing competition policies in the EU and the US,he argued that the latter tended to be influenced in partby the ideological position of the party in power, asillustrated by the different handling of the Microsoft caseunder the Clinton and Bush administrations. This wasnot an issue in the EU context. As a supranationalinstitution, the EU’s decisions were also not subject todiffering interpretations of the law by federal and stateauthorities, as in the US.

Professor Monti also emphasized the need for carefuleconomic analysis in implementing competition policy,and called for greater cooperation and exchange ofinformation among national competition regulatorybodies.

Professor Monti is theauthor of numerousp u b l i c a t i o n s ,particularly onmonetary andfinancial issues, fiscalpolicy and Europeanintegration. Hislecture was chaired byAssoc Prof Tan TaiYong, Dean, Faculty ofArts and SocialSciences, and attendedby about 100 personsfrom the public and private sectors, embassies andacademia.

LUNCH AND MEETINGS WITHSTAFF OF DEPARTMENT OFECONOMICS

2 November 2007: Visit by Professor Bruno S. Frey, underthe auspices of the Ministry of Trade and Industry,Singapore (MTI)

14 November 2007: Lunch-time discussion on“Reflections of a Policy Economist in Singapore: AnInformal Discussion” with Mr. Teh Kok Peng, Presidentof GIC Special Investments Pte Ltd

SCAPE POLICY RESEARCHWORKING PAPER SERIES

The following working papers were added to SCAPE’swebsite during this period.

“Overlapping Free Trade Agreements of Singapore-USA-Japan: A Computational Analysis”Dr. Hur Jung and Mr. Chong Soo Yuen

Mr Ravi Menon, Second PermanentSecretary of the MTI.

Professor Mario Monti,President of Bocconi University.

Participants at the SCAPE PublicLecture by Professor Mario Monti.



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“Do Banks Respond to Capital Requirement? Evidencefrom Indonesia”Dr. Yohanes E. Riyanto and Dr. Rasyad A. Parinduri (anarticle based on this was also published in the StraitsTimes, 26 September 2007)

“Exchange Rate Exposure of Sectoral Returns andVolatilities: Evidence from Japanese Industrial Sectors”Mr. Prabhath Jayasinghe and Assoc Prof Albert K. Tsui

Professor Chen Songnian from the Hong KongUniversity of Science and Technology has joined theDepartment Economics, NUS on 1 January 2008 as aVisiting Professor. He has been awarded aProfessorship with tenure effective from 1 March 2008.Professor Chen is quite clearly the best econometricianof his generation in Asia and is currently ranked 36th

in the world based on a 2007 ranking exercise (basedon standardized page counts for all econometricspublications since 1995; see WORLDWIDEECONOMETRICS RANKINGS: 1989-2005 by BadiBaltagi, forthcoming in Econometric Theory). He hasbeen Chair Professor of Economics at Hong KongUniversity of Science and Technology since July 2005.He has a very distinguished research career whichremains extremely active. Since receiving his PhD inEconomics from Princeton University in 1994, he haspublished (or has accepted for publication) fourteenpapers in Tier 1 economics journals, as well as a paperin the highly-regarded Journal of the AmericanStatistical Association (JASA), and a paper acceptedfor publication in the Annals of Statistics which isanother leading statistics journal. Professor Chen’sprimary field is econometrics, with an emphasis ontheoretical and applied microeconometrics. He couldlead the development of econometrics in thedepartment, and in particular the area ofmicroeconometrics which should provide a nicecomplement to our strength in microeconomic theory.

Professor Chew Soo Hong from the Hong KongUniversity of Science and Technology has beenappointed as a Visiting Research Professor, withcourtesy appointments in the Departments ofEconomics and Business Policy with effect from 1January 2008 to 30 June 2008.

Assoc Prof Parimal Kanti Bag has been appointedas an Associate Professor with tenure effective from1 November 2007. He has joined us from the Universityof Surrey where he was a tenured full Professor. Hisarea of work is microeconomics in which the Faculty

and the Department hope to excel globally. The FASShas identified Economics as one of its prioritydepartments, and aspires to build it into a world-classdepartment. Most top economics departments in theUS tend to be strong in only one and not all branches.The Department has been able to build a very stronggroup in the area of microeconomics (broadly defined)which is close to achieving an international standing.There are now 5-6 faculty members who are regularlypublishing in top journals in microeconomics, and thedepartment intends to augment this area by recruiting5-6 senior scholars in the field of microeconomics. Hisjoining the Department will significantly strengthenthis group and raise its profile.

Assoc Prof Joydeep Bhattacharya from Iowa StateUniversity has been appointed as a Visiting AssociateProfessor with effect from 2 January 2008 to 30 June2008.

Assoc Prof Helle Bunzel from Iowa State Universityhas been appointed as a Visiting Associate Professorwith effect from 7 January 2008 to 30 June 2008.

Assoc Prof Chong Juin Kuan from theDepartment of Marketing, NUS Business School hasbeen appointed to the Department of Economicsunder the Courtesy Joint-Appointment with effectfrom 1 November 2007 to 31 October 2008.

Dr Kevin K. Tsui from Clemson University has beenappointed as a Visiting Fellow with effect from 7January 2008 to 4 June 2008.

Dr Zhou Lingzhi from the Hong Kong University ofScience and Technology has been appointed as aLecturer in the Department of Economics, NUS witheffect from 1 January 2008 to 31 December 2010.

Ms Sreyashi Datta Sen has been appointed as aTeaching Assistant with effect from 16 January 2008to 31 December 2008.

Forthcoming working papers include studies ofSingapore’s direct investments in Sri Lanka by Assoc ProfTilak Abeysinghe and Ananda Jayawickrama, ofknowledge flow in East Asia by Assoc Prof AlbertGuangzhou Hu and of economic openness, disciplinedgovernment and ethnic peace by Nava Ravi Kumaranand Assoc Prof Tilak Abeysinghe.

A WARM WELCOME TO THE DEPARTMENT

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STAFF PUBLICATIONSSMALL HUBS, LARGE SPOKES AND OVERLAPPING FREETRADE AGREEMENTSby Hur Jung and Chong Soo YuenWorld Economy (forthcoming)The proliferation of overlapping free trade agreements (FTA)in the recent years has led to pair-wise hub-and-spokes (HAS)throughout the world. Being avid subscribers to FTAs, manycountries in the Asia-Pacific region including the USA, Japan,Singapore, South Korea, Thailand and Australia have becometrade hubs to their partners who are in turn relegated to spokestatus. In this paper, we question whether being a hub iswelfare optimal for a small and open economy like Singaporecompared to membership in a single bilateral FTA or a multi-member free trade zone. Within this context, we use acomputable general equilibrium model to examine the welfareimplications of the triangular trade relationship of the USA,Singapore and Japan. This is facilitated by the Japan-SingaporeEconomic Partnership Agreement, the USA-Singapore FreeTrade Agreement, and a hypothetical USA-Japan EconomicPartnership Agreement. The analysis is extended to incorporate“super-hub” effects; that is, the spoke countries can be tradehubs in other HAS systems. The experiment reveals that hubstatus generates positive welfare gain and is the highestSingapore can get from the trade configurations considered.Meanwhile, Japan loses more than the USA when both arerelegated to spoke status. These findings prove robust underdifferent market structures and production technologies,deeper economic integration, “super-hub” effects, as well as,uncertainty in the key model parameters and the extent oftrade liberalisation shocks.

OUTSOURCING TYPES, RELATIVE WAGES, AND THEDEMAND FOR SKILLED WORKERS: NEW EVIDENCE FROMUS MANUFACTURINGby Hur Jung, Yohanes Eko Riyanto and AekapolChongvilaivanEconomic Inquiry (forthcoming)Existing studies on the impact of outsourcing on relative wagesand the demand for skilled workers mainly focus on aggregateoutsourcing, in which imported intermediate inputs are usedas a proxy. We depart from the existing studies by focusing onvarious types of outsourcing based on the six-digit NAICS USmanufacturing data. We show that downstream materials andservice outsourcing are skill-biased whereas upstream materialsoutsourcing is not. We also produce other supplementaryresults pertaining to the impact of technology, different capitalinputs on relative wages, and the demand for skilled workers.

TIME-INCONSISTENT DOMESTIC ENVIRONMENTALPOLICIES AND OPTIMAL INTERNATIONALENVIRONMENTAL ARRANGEMENTSby Hur Jung and Aekapol ChongvilaivanJournal of Institutional and Theoretical Economics, Volume 163,Number 4, December 2007, pp. 731-758.The present paper employs the standard pollution controlincorporating countries’ asymmetries, not only in theirconsumption and environmental concerns, but also in theirenvironmental technologies. First, we show that the absenceof international collaboration makes domestic environmentalpolicies discretionary and may result in the time-inconsistentoutcome. Then, we compare two cooperative regimes,international environmental agreements (IEA) and the centralenvironmental authority (CEA). In certain conditions, IEAs maynot be more efficient than the CEA in pollution abatement.

Furthermore, although the IEA Pareto dominates the CEA, thesuccess of IEAs may be hampered by conflicts of interests amongthe signatories.

ON THE RELEVANCE OF ALTERNATIVES IN BARGAINING:GENERALIZED AVERAGE PAY-OFF SOLUTIONSby Younghwan InInternational Journal of Game Theory (forthcoming)We generalize the average pay-off solution proposed byAnbarci (1995), which depends on all the alternatives, and showthat the Nash and Kalai-Smorodinsky solutions are limits ofgeneralized average pay-off solutions. We formalize thenotion of relevant alternatives and compare solutions in termsof the relevance of alternatives.

ACADEMIC INTERACTIONS AMONG CLASSROOM PEERS:A CROSS-COUNTRY COMPARISON USING TIMSSby Kang Chang HuiApplied Economics, Volume 39, Issue 12, July 2007, pp. 1531-1544.Using an international data set from the Third InternationalMathematics and Science Study (TIMSS), we examine academicinteractions among classroom peers for each country, andcompare them across different countries. To minimize the biasthat usually plagues peer effects studies, we take within-student differences between mathematics and science testscores. The results show a significantly positive associationbetween peers’ performance and own achievement for mostof the TIMSS countries. Moreover, the degree of mutual peerinteractions within classroom is found to be surprisingly closeacross different countries, even if there exists a wide range ofinstitutional differences in middle-school education (e.g.degree of ability mixing).

EFFECTS OF ABILITY MIXING IN HIGH SCHOOL ONADULTHOOD EARNINGS: QUASIEXPERIMENTAL EVIDENCEFROM SOUTH KOREAby Kang Changhui, Cheolsung Park and Lee Myoung-JaeJournal of Population Economics, Volume 20, Issue 2, April2007, pp. 269-297.We estimate impacts of ability mixing compared to abilitygrouping in high school education on students’ adulthoodearnings. To overcome endogeneity and selection problemsthat plagued the previous studies, we exploit a policyexperiment in South Korea in the 1970s, which changed theeducation regime of general high schools from grouping tomixing in major cities. We find that the mixing treatment hasa positive but statistically insignificant effect on averageadulthood earnings. We also find that while mixing has positiveeffects on low ability students’ adulthood earnings, it hassmaller positive or even negative effects on higher abilitystudents.

CAPITAL FLOWS AND EXCHANGE RATE VOLATILITY:SINGAPORE’S EXPERIENCEby Basant K KapurCapital Controls and Capital Flows in Emerging Economies,edited by Sebastian Edwards, Chicago: University of ChicagoPress, pp. 575-603, 2007.Singapore’s experience with international capital flows overthe past two decades or so has been a rather – although notcompletely – benign one, owing to strong fundamentals andgenerally well-conceived macro-economic policies. We beginby briefly discussing the experience in 1998 of Hong Kong,

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another city-state with a well-developed banking system andequities market, and operating on a Currency Board (CB) system(although with some differences from Singapore’s CB system).The discussion serves to identify some ‘areas of vulnerability’in the Hong Kong set-up at that time. We next discussSingapore’s policy background and early experience, and inthe light of Hong Kong’s experience are better able toappreciate how Singapore’s policy framework served tocircumvent or minimize important vulnerabilities. Particularattention is paid to Singapore’s exchange-rate policy and itspolicy of non-internationalization of the Singapore dollar.Equity- and currency- market interactions are also considered.We next show how Singapore emerged relatively unscathedfrom the 1997 Asian Crisis. Lastly, we discuss Singapore’s debtmarkets, and show how under the imperative of promotingthe development of its bond markets the non-internationalization policy has been progressively relaxed,while retaining key safeguards.

SINGAPORE: FROMPLACE TO NATIONby Lee Soo AnnSingapore: PearsonEducation, 2007.A textbook for the EC2373/SSA 2220 course “GlobalDimensions of the SingaporeEconomy”. This book coversthe economic developmentof Singapore from itsinception as a trading postof the East India Company in1819 to the present day. Its11 chapters show howSingapore expanded andchanged its globaldimensions in people,

money, trade, investment and technology.

GRACE IN ADVERSITY:JOURNEYS INPROVIDENCE ANDPERSEVERANCEby Lee Soo Ann and LeeSoo JinThis book traces how animmigrant family fromChina planted its roots inSingapore and hasexpanded through sixgenerations despiteadversity and economicchanges in Singapore. It isprivately circulated andavailable from Dr Lee SooAnn.

AIRLINE PASSENGER FATALITY AND THE DEMAND FORAIR TRAVELby Liu Haoming and Zeng JinliApplied Economics, Volume 39, Issue 14, August 2007,pp.1773-1781.After the 11 September tragedy, 20% of the scheduled USairline flights were cancelled and the passenger load factor

was down to 56% from 66.6% a year ago. Was the high deathtoll or the nature of the attack itself responsible for thisdramatic decline? Using the US data, we find that the demandfor air travel did fall in years of relatively high fatality rate,but the demand is not sensitive to whether the high fatalityrate is due to any terrorist activities. Our estimation resultssuggest that even after controlling for the sharp increase inthe fatality rate because of the 11 September tragedy, aconsiderable proportion of the decline in demand for air travelthat year is still unexplained. This evidence could suggest thatthere has been a fundamental shift in consumers’ perceptionof air travel safety in the aftermath of the tragedy.

WHY A SIMPLE SECOND-PRICE AUCTION INDUCESEFFICIENT ENDOGENOUS ENTRYby Lu JingfengTheory and Decision (published online)This paper further studies ex ante efficient auctions in thesetting of Stegeman (1996), where there exist entry costs forbidders who know their valuations. An alternative method isestablished to address efficient auctions. This method illustratesthe intuition why the ex ante efficient allocation is Bayesianimplementable through the Stegeman (1996) auction (a secondprice auction with a reserve price equal to seller’s valuationand no entry fee). More importantly, our method leads to analternative ex ante efficient auction that implements uniquelythe efficient entry. Thus, this alternative auction solves the entryindeterminacy problem of the Stegeman (1996) auction, whichgenerally induces inefficient entry equilibria besides theefficient ones.

CONTEST DESIGN AND OPTIMAL ENDOGENOUS ENTRYby Lu Jingfeng and Fu QiangEconomic Inquiry (forthcoming)This paper derives the effort-maximizing contest rule and theoptimal endogenous entry in a context where potentialparticipants bear fixed entry costs. The organizer is allowed todesign the contest under a fixed budget with two strategicinstruments: the value of the prize purse and a monetarytransfer (entry subsidy/fee) for each participating contestant.The results show that the optimally designed contest attractsexactly two participating contestants in its unique subgameperfect equilibrium and extracts all the surplus fromparticipating contestants. The direction (subsidy or fee) andamount of the monetary transfer depend on the magnitudeof the entry cost.

MARRIAGE MARKET, PARENTS’ BARGAINING POWERS,AND CHILDREN’S NUTRITION AND EDUCATIONby Cheolsung ParkOxford Bulletin of Economics and Statistics, Volume 69, Issue6, December 2007, pp. 773-793.Test of resource pooling and test of effect of sex ratio in themarriage market on intrahousehold resource allocation arecombined to test the unitary household model. The consistencycondition between the two tests is derived to test the Nashhousehold bargaining and Pareto-efficient household models.I examine intrahousehold resource allocation to children’snutrition and education in Indonesia. For children’s nutrition,the unitary household model is rejected in favour of the non-unitary models. The results for investment in education aremixed. The decision-making process may differ depending onthe type of decision being made.

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OWNERSHIP OF PROPERTY RIGHTS AND THEALLOCATION OF TALENTSby Yohanes Eko Riyanto and Liu HaomingApplied Economics (forthcoming, available online on 3January 2008)Under the reserve-clause system that assigns the property-rightson the Major League Baseball players’ services to teams, playertransfers are negotiated between teams without theinvolvement of players. In contrast, under the current free-agency system, players with free-agent status negotiate directlywith potential suitors. Thus, the system assigns the 15 property-rights to players. Using data extracted from the BaseballArchive (http://baseball1.com), this article examines the effectof the change in the property-rights assignment on theallocation of talents across teams. We find that the changeincreased large-market teams’ shares of veteran all-star playersand the concentration of senior players.

THE PLURALISTIC VIEW OF POLITICS: ASYMMETRICLOBBIES, IDEOLOGICAL UNCERTAINTY AND POLITICALENTRYby Aggey Semenov and David MartimortEconomics Letters, Volume 97, Issue 2, November 2007, pp. 155-161.In a spatial common agency model, two asymmetric interestgroups (principals) influence a unique decision-maker (agent).The decision-maker chooses a one-dimensional policy on behalfof those principals and has private information about hisideology after contracting with principals. The policy is alwaysefficient and reflects a weighted average between theprincipals and the agent’s ideal points. The decision-maker’sexpected rent can be fully extracted by congruent interestgroups but not when interest groups’ objectives are tooconflicting. The degree of congruence is endogenous. Itdepends on the level of ideological uncertainty, whetherinterest groups can easily buy influence or not, and on theirrelative ideological distance with the principal. In particular,the game of influence is biased towards the closest principal.This suggests that free-entry equilibria of a lobbying game mayonly reflect the full diversity of the lobbying groups’preferences when there is enough ideological uncertainty andwhen those groups are close to be equally distant to thedecision-maker.

POLITICAL BIASES IN LOBBYING GAMES UNDERASYMMETRIC INFORMATIONby Aggey Semenov and David MartimortJournal of European Economic Association, Volume 5, Issues2-3, April-May 2007, pp. 614-623.This paper introduces asymmetric information in a pluralisticmodel of interest group competition and analyzes its impacton policy biases. Lobbying groups are uninformed on adecision-maker’s preferences and use nonlinear contributionsnot only to compete for the agent’s services but also to learnabout his preferences in an otherwise standard common agencymodel of lobbying. Asymmetric information can be, either onthe decision-maker’s ideal point (horizontal differentiation) oron the strength of his own preferences for ideology (verticaldifferentiation). At equilibrium, asymmetric informationredistributes bargaining powers between interest groups andthe decision-maker in non-trivial ways that may depend onthe kind of informational asymmetry which is postulated.Asymmetric information tends to mitigate the influence ofinterest groups and contributions might be significantlyreduced. Interest groups no longer contribute for a change inpolicy what it is worth to them as under complete information.Contributions incorporate a discount related to the group’sability to solve the asymmetric information problem.

CORE, EQUILIBRIA AND INCENTIVES IN LARGEASYMMETRIC INFORMATION ECONOMIESby Sun Yeneng and Nicholas C. YannelisGames and Economic Behavior, Volume 61, Issue 1, October2007, pp. 131-155.We consider a perfectly competitive ex ante economy with acontinuum of agents and negligible asymmetric information.For such an economy we recast the basic classical results onthe existence of Walrasian equilibrium, core equivalence, andthe blocking size of coalitions. Moreover, we examine theincentive compatibility of the ex ante Pareto, core andWalrasian allocations.

ON THE SEGMENTATION OF MARKETSby Serene Tan and Nicolas L. JacquetJournal of Political Economy, Volume 115, Number 4, August2007, pp. 639-664.This paper endogenizes the market structure of an economywith heterogeneous agents who want to form bilateralmatches in the presence of search frictions and when utility isnontransferable. There exist infinitely many marketplaces, andeach agent chooses which marketplace to be in: agents get tochoose not only whom to match with but also whom they meetwith. Perfect segmentation is obtained in equilibrium, whereagents match with the first person they meet. All equilibriahave the same matching pattern. Although perfect assortativematching is not obtained in equilibrium, the degree ofassortativeness is greater than in standard models.

ITERATED STRICT DOMINANCE IN GENERAL GAMESby Xiao Luo, Yi-Chun Chen and Ngo Van LongGames and Economic Behavior, Volume 61, Number 2,November 2007, pp. 299-315.We offer a definition of iterated elimination of strictlydominated strategies (IESDS*) for games with (in)finite players,(non)compact strategy sets, and (dis)continuous payofffunctions. IESDS* is always a well-defined order independentprocedure that can be used to solve Nash equilibrium indominance-solvable games.We characterize IESDS* by meansof a “stability” criterion, and offer a sufficient and necessaryepistemic condition for IESDS*. We show by an example thatIESDS* may generate spurious Nash equilibria in the class ofReny’s better-reply secure games. We provide sufficient/necessary conditions under which IESDS* preserves the set ofNash equilibria.

STABILITY, SEQUENTIAL RATIONALITY, AND SUBGAMECONSISTENCYby Xiao Luo and Huang Sheng-ChiehEconomic Theory, Volume 34, Number 2, February 2008, pp.309-329.In this paper we analyze dynamic strategic behavior by meansof the idea of “stability.” We develop a solution concept of“sequentially stable equilibrium (SSE)” that satisfies subgameconsistency. All SSEs are characterized by the largest stable setthat yields exactly all the backward induction outcomes. Wealso provide a refinement of the SSE. We compare the SSE andits refinement with some existing solution concepts in theliterature.

MUTUALLY ACCEPTABLE COURSES OF ACTIONby Xiao Luo, Joseph Greenberg and Sudheer GuptaEconomic Theory (forthcoming)We offer a game-theoretic framework that enables the analysisof situations whereby rational individuals with different beliefsand views of the world agree to a shared course of action. Weintroduce a new solution concept: a mutually acceptable courseof action, which can be viewed as an (incomplete) contract or

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a social norm that free rational individuals would be willingto follow for their own diverse reasons. We show that byvarying the degree of completeness of the underlying courseof action, our concept can be related to commonly usedsolutions, such as perfect equilibrium, perfect Bayesianequilibrium, (rationalizable) self-confirming equilibrium, andrationalizable outcomes.

ON THE FOUNDATION OF STABILITYby Xiao LuoEconomic Theory (forthcoming)The concept of stability à la J. von Neumann and O.Morgenstern, which is composed of a pair of internal andexternal stability requirements, formalizes the idea of standardof behavior. This paper studies the decision-theoreticfoundation of stability, by establishing epistemic conditionsfor a “stable” pattern of behavior in the context of strategicinteraction.

BAYESIAN COALITIONAL RATIONALIZABILITYby Xiao Luo and Chih-Chun YangEconomic Theory (forthcoming)In this paper we extend Ambrus’s (2006, Quart. J. Econ. 121,903-929) concept of “coalitional rationalizability (c-rationalizability)” to situations where, in seeking mutually

beneficial interests, players in groups (i) make use of Bayes’rule in expectation calculations and (ii) contemplate variousdeviations, i.e., the validity of deviation is checked against anyarbitrary sets of strategies, and not just only against restrictedsubsets of strategies. We offer an alternative notion of Bayesianc-rationalizability suitable for such complex social interactions.We show that Bayesian c-rationalizability possesses niceproperties similar to those of conventional rationalizability.

OPTIMAL SOCIAL SECURITY IN A DYNASTIC MODELWITH INVESTMENT EXTERNALITIES AND ENDOGENOUSFERTILITYby Zhang Jie and Zhang JunsenJournal of Economic Dynamics and Control, Volume 31, Issue11, November 2007, pp. 3545-3567.This paper studies optimal pay-as-you-go social security withinvestment externalities, positive bequests and endogenousfertility. With an investment externality, a competitive solutionwithout social security suffers from under-investment in capitaland over-reproduction of population. We show the existenceof time-consistent optimal social security that improves welfareby reducing fertility and increasing capital intensity. We alsoillustrate numerically that a small degree of this externalitycan justify the observed high ratios of social security spendingto GDP.

IV ASIAN GENERAL EQUILIBRIUM THEORYWORKSHOP (GETA 2007)18-19 AUGUST 2007

The IV Asian General Equilibrium Theory Workshop(GETA 2007) was held at the Department ofEconomics, National University of Singapore on 18-

19 August 2007.

The Asian General Equilibrium Workshop allowsparticipants to present and be informed of the latestdevelopments in general equilibrium theory and itsapplications in other areas of economics, such asmacroeconomic and monetary theory, public economics,and the theory of finance.

Papers presented in GETA are eligible for the Special Issueof the Journal of Mathematical Economics devoted toconferences in general equilibrium.

John Geanakoplos (Yale) was the Plenary Speaker forthe workshop. Invited speakers included Bernard Cornet(Kansas and Paris I) and Cuong Le Van (Paris I). Therewere 22 papers presented. Assoc Prof Aditya Goenkachaired the organizing committee.

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2008 Economics Alumni Committee

(Seated from left to right): Jeremiah Ong (class of 2000s cohortrepresentative), Tang Wee Lip (1966 Honours, Hon. Vice-Chairman),Lee Soo Ann (1960 Honours, Hon. Chairman), Daniel Lo (class of1980s cohort representative) & Tan Tai Kiat (2002 Honours, Hon.Secretary).(Standing from left to right): Connie Chung (1983 Honours, Hon.Treasurer), Charan Kaur (class of 1970s cohort representative), BaoBinbin (2004 Master’s, Asst. Hon. Treasurer), Chiang Huimin (2006Honours, Asst. Hon. Secretary), Patricia Ang (class of 1990s cohortrepresentative) & Monica Chang (class of 2000s classrepresentative).

Alumni Activities: July - December2007

NUS Economics Alumni organised the followingactivities:

1. Talk on “The Manager as Coach” by Dr Tsao Yuan,1978 Honours Alumnus

2. Talk by Assoc Prof Victor Savage on “Place-Names inSingapore” and a speaker on the Chinese MooncakeFestival in September 2007

3. Talk by Dr Peter Wilson on “Asian FinancialIntegration” in October 2007

4. First Annual Dinner with Mr Ngiam Tong Dow,1959 Honours Alumnus and Pro-Chancellor of NUS,as guest speaker. The text of his widely publicisedtalk can be downloaded from http://www.nuseconomicsalumni.org. 100 alumni andtheir friends attended this fine dining event at aprivate club.

Alumni Activities: January -September 2008

For 2008, NUS Economics Alumni is organising as its firstevent a talk by Mr Wee Sin Tho, 1970 EconomicsAlumnus, who will speak on “An Asset Allocation Modelfor Financial Investment”. Mr Wee is well qualified tospeak on this subject as he is the NUS Chief Strategist,Endowment Programme and plays a major role in theinvestment portfolio of the few billion dollars held byNUS. After graduating from NUS, Mr Wee started hiscareer with the then Ministry of Science and Technologybefore moving on to senior positions where he had beeninvolved in asset management, equity brokering, debtorigination and structured financial solutions. This talkwill be given on Friday, 29 February 2008 at the OrchardRoad YMCA 4th floor function room at 7.30 pm. Lightrefreshments will be served. Those who wish to comeshould email [email protected]. A donation of at least$10 pax is expected to cover costs. Those who can shoulddonate more as NUS Economics Alumni has nosubscription income.

For its second event, NUS Economics Alumni is organisinga barbecue at the poolside of Peach Garden in Katong,by courtesy by one of its members. The date is Friday,25 April at 7 pm. Further details can be obtained fromthe NUS Economics Alumni website at http://www.nuseconomicsalumni.org or by [email protected].

For June, an economic roundtable is being planned, andin September a celebration of the Chinese MooncakeFestival. An NUS Alumni Office Home-Coming event isexpected to be organised for early July 2008.

All those who majored or did their Honours in Economicsfrom NUS or its predecessor institutions are eligible tojoin. Just email [email protected] with your contactdetails, and year of graduation. You will then be put onour electronic mailing list.

NUS ECONOMICS ALUMNI

We would like to express our sincere appreciation to all those who have contributed to this issue of ECONews.

We welcome your contributions on teaching, research and learning topics, as well as feedback on this issue. Pleasewrite to: [email protected].

Do we have your correct name and address? Would you like us to send a copy of ECONews to your friends/colleagues?Please fill in the form below and fax or email it to us:

Economics Newsletter (ECONews)Department of Economics

Faculty of Arts and Social SciencesNational University of Singapore

1 Arts Link, Singapore 117570Website : http://nt2.fas.nus.edu.sg/ecs/

Email: [email protected] No. : (65) 6775 2646

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STAY IN TOUCH

Professor Andrew K. Rose from the Haas School ofBusiness, University of California at Berkeley wasappointed as a Visiting Professor in the Departmentsof Finance and Accounting, and Economics from 19 July2006 to 18 July 2007.

Assoc Prof Hoon Hian Teck was appointed as anAdjunct Associate Professor in the Department ofEconomics, NUS from 2 January 2002 to 30 June 2007.He first joined the University on 5 July 1984 as a SeniorTutor.

Assoc Prof Tay Boon Nga was appointed as anAssociate Professorial Fellow in the Department ofEconomics, NUS from 1 February 2005 to 30 November2007. He first joined the University on 10 June 1971 asa Lecturer.

Assoc Prof Wong Wing Keung has been with theDepartment of Economics, NUS since 21 June 1989 until22 January 2008.

THANK YOU AND OUR BEST WISHES FOR THE FUTURE

Dr Chung Wankyo (Assistant Professor) has beenwith the Department of Economics, NUS since 13 July2001 to 31 October 2007.

Dr Lee Jin (Assistant Professor) has been with theDepartment of Economics, NUS since 5 July 2000 to31 December 2007.

Dr Rasyad Parinduri Akhmad was with theDepartment as a Research Fellow for SCAPE from 9January 2007 to 8 January 2008.

Mr Chong Soo Yuen was with the Department as aResearch Assistant for SCAPE from 11 April 2007 to 2November 2007.

Ms Nancy Goh Wuan Tze was with the Departmentas a Senior Administrative Officer from 2 May 2007 to29 February 2008.

Ms Yong Yik Wei was with the Department as aResearch Fellow for SCAPE from 17 February 2006 to31 December 2007.

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The annual GIC-National Economics and FundManagement Quiz was concluded at theUniversity Cultural Centre on 21st July 2007.

Earlier in May, more than 700 students from 17 JuniorColleges and Centralized Institutes had gone througha preliminary round and 4 institutions wonthemselves a place in the finals. These institutionswere National Junior College, Hwa Chong Institution,Raffles Junior College and Victoria Junior College.

Each of the finalist teams went through apresentation round, where each team presented adifferent economic issue. VJC started with a debateon increasing unemployment in wealthy countrieswhile NJC presented on the ministerial pay rise. Anentertaining presentation was put up by RJC, whofocused on a showdown between two opposingparties on the GST hike. Last but not least, HCI putup a skit based on the pegging of the Yuan, andintroduced political characters from the countries inquestion. These varied styles of presentation provedto be both intellectually stimulating andentertaining.

Teams also battled their wits against one another inthe Speed and Team Rounds, which called for bothstrategy and lightning reflexes. Based on the game‘Jeopardy’, teams could choose to direct theirquestions to another school in the team round,forcing the latter team to rise up to the challenge orface the consequences of point deduction.

Initially, HCI led the tally during the speed round withtheir quick and accurate answers. However, VJCdominated the team round with their sharp instinctsand strong foundation of Economics. At the end, theteam consisting of Ang Hwee Yong Eugene,Aishwarya Devi Pragasam, Chua Wei-Lin, Too Xing Jiand Vanessa Chong from Victoria Junior College werecrowned as champions. HCI came in second, whileRJC and NJC came in third and fourth respectively.Each team received cash prizes and trophies for theirhard work in the past few months.

NUS ECONOMICS SOCIETY (ENS)

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Victoria Junior College Emerges Victorious in National Economics andFund Management Quiz 2007

This year, the event was graced by the Guest ofHonour, Mr. Karsono Kwee, Executive Chairman ofEurokars Group and winner of the Entrepreneur ofthe Year (2006) award. Also present at the event wereProfessor Parkash Chander and Professor BasantKapur, Head and Deputy Head of the NUS EconomicsDepartment respectively. Judges included AssociateProfessor Albert Tsui Ka Cheng, Associate ProfessorShandre M. Thangavelu and Dr. Lim Boon Tiong, allof whom come from the Economics Department ofNUS. Their expertise in various fields of Economicsproved to be valuable in the judging and grading ofthe finalists.

The organizing committee from the NUS EconomicsSociety would like to thank our sponsor, Governmentof Singapore Investment Corporation. Thecommittee would also like to extend ourappreciation to the Economics Department and theOffice of Student Affairs, National University ofSingapore, for their help rendered over the durationof the quiz.

This year, the annual quiz will undergo a hugerevamp to focus on improving the financial literacyof the students. The new quiz will be named NationalEconomics and Finance Management Quiz 2008 andwill include questions on basic financial planning.Polytechnic students will also be allowed to join thiscompetition for the first time. The quiz aims toincrease the students’ enthusiasm in learning aboutmanaging their personal finance and through theprocess, gain greater financial literacy. The event willbe held in July 2008 and we believe the event willbe a resounding success like the previous one.

econews - nus · jan 2008 3 econews the department of economics seminars series is usually held on...

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