Output-price dynamics in the asean-5 countries: evidence from the pre- and post-1997 financial turmoil

Kassim, Salina and Abd. Majid, M. Shabri (2008) Output-price dynamics in the asean-5 countries: evidence from the pre- and post-1997 financial turmoil. Gadjah Mada International Journal of Business, 10 (2). pp. 261-280. ISSN 1411-1128

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Abstract

We analyze the cyclical behavior between outputs and prices in major ASEAN economies, namely Malaysia, Indonesia, Thailand, Singapore and the Philippines over two sample periods: the pre-crisis period (1990 to 1996) and the post-crisis period (2000 to 2006). Specifically, the study aims to shed the light on two issues:(i) the possibility that there is a change in the patterns of the correlations between real activities and prices in a particular country in the pre-crisis period compared to the post-crisis period; and (ii) the synchronization of real activity and price relationships or the business cycles across the major ASEAN countries. In order to analyze the output-price relationship across the countries and the time periods, we adopt several batteries of tests including the Pearson correlation analysis, the Auto-Regressive Distributed Lag (ARDL) model and the Vector Error-Correction Model (VECM). The study documents that the output-price relationship has changed in several countries following the crisis in 1997/1998. While there is clear business cycles synchronization between the ASEAN-5 countries in the short-run, results have been mixed in the long run. Results of this study contribute towards further enriching the policy recommendations to help ensuring the viability and effectiveness of the economic cooperation between the ASEAN nations.

Item Type:	Article (Journal)
Additional Information:	4600/3432
Uncontrolled Keywords:	Output-price dynamics; ARDL; VECM; Economic cooperation; ASEAN
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HB Economic Theory
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Kulliyyah of Economics and Management Sciences > Department of Economics
Depositing User:	Prof. Dr. Salina Kassim
Date Deposited:	19 Oct 2011 11:14
Last Modified:	19 Oct 2011 11:14
URI:	http://irep.iium.edu.my/id/eprint/3432

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