Having “strong macroeconomic fundamentals,” as the Philippines supposedly did pre-COVID-19, matters much less (if at all), in and of itself, to economic outcomes in the context of a physical shock. Using a model for 21 countries including ASEAN+3, developing East Asia and South Asia, as well as Australia and New Zealand to explain the difference in actual 2019 and forecasted 2020 GDP growth, we find that, ceteris paribus , stronger national capacities to detect and respond to emerging outbreaks (in particular, laboratory capacity) are associated with better short term economic outcomes. For the Philippines, up to 3.6 percentage points in lost GDP growth forecasted in 2020 could have been saved. Our results suggest that a dearth in health system capacity should be prioritized over and above any other type of spending, including traditional stimulus (e.g., large-scale infrastructure) spending. Our results also underscore the need to rethink what is necessary for the stability and resilience of an economy—what are the “economic fundamentals”—in an era of global physical shocks, including those brought about by climate hazards. Given physical shocks, efficient and prepared government institutions matter. A macro economy is not resilient if these are not.

This study uses the Caliendo and Parro ( 2015 ) multi-sector, multi-country, general equilibrium Ricardian trade model with national and international input-output linkages to assess the impact on welfare of higher tariffs due to the U.S.–China trade war in the case of the Philippines. A sample of 65 countries including a constructed rest of the world is used, with 31 ICIO tradeable and non-tradeable sectors and 2015 as the base year. The constructed scenario is of the U.S.–China tariff tit-for-tat and retaliatory measures taken by Mexico, Canada, EU, Russia, and Turkey against the United States during 2018. The findings show that the Philippines and others in the sidelines could incur larger welfare losses than those directly involved in the conflict, in contrast with the sanguine prediction of other models.

This paper constructs quarterly financial conditions indexes (FCIs) for eight Asian economies—namely, Hong Kong, Indonesia, Japan, South Korea, Malaysia, the Philippines, Singapore, and Thailand—using a common factor methodology based on Hatzius et al. ( 2010 ). A wide array of financial data is included in the indexes based on identified monetary transmission channels in the literature. Bank-related indicators, various measures of financial stress and risk, and credit surveys, where available, are incorporated to fully reflect the state of the financing environment. The FCIs for Asia successfully capture important episodes in each economy's financial history, but only the indexes of financially advanced economies Japan and Singapore have sufficient forecasting power to predict output growth and inflation. High co-movement of Asian FCIs suggests highly similar monetary policies in the region that are strongly linked with monetary policy in the United States.

The subject of this study is income polarization, an important but neglected dimension of income distribution. Estimates of two measures of income polarization are obtained for the population, rural, and urban sectors using household survey data on expenditures per capita for a sample of Asian countries. The findings include the following: Income polarization and inequality, the latter measured using the Gini coefficient, are highly positively correlated; in most countries, urban income polarization is higher than rural income polarization; and lastly, higher rates of growth in GDP and per capita GDP, higher levels of educational attainment of household heads, and high rates of employment in manufacturing may be important in keeping income polarization at low levels.

This study examines the effects of capital account restrictions on capital flows in nine emerging Asian economies using panel regressions with 75 economies and fixed effects over the period 1995–2007. The results show that effectiveness of capital controls in the nine emerging Asian economies varies by asset type and by direction of flow and may differ from that in the rest of the world. For example, unlike in the rest of the world, the use of controls on capital outflows in emerging Asia actually increases the amount of these outflows. This finding suggests that it may be best for emerging market economies in Asia to liberalize rather than constrain capital outflows if they want to prevent such outflows.

The Philippines has a unique economic history relative to its neighbors. It is less open to trade and has been unable to attain and sustain high rates of growth. Today, globalization and participation in the global economy primarily means the export of labor rather than goods. The Philippines' reliance on remittances from its cadre of overseas Filipino workers has become the main pillar of its growth and development strategy. Going into the period of the global crisis, the Philippines had robust growth relative to its historical average and a strengthened banking system. The effects on the real sector intensified in the last quarter of 2008. While there are continuing attempts to use expansionary monetary and fiscal policy to spur the economy, the ability of the Philippines to pursue such expansionary policies may be limited by the still relatively high inflation and the government's historically weak fiscal position. Although it appears that the Philippines will muddle through and survive the current global crisis, it will continue to face the daunting task of effectively leveraging for long-term growth and development.

This study provides empirical evidence for the proposition that asset price booms matter because they tend to bring about the worst output, price, and inflation outcomes in the case of eight East Asian countries, namely, Hong Kong SAR, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, and Thailand. The main findings are: (i) asset price booms in housing and equity markets, especially in housing, significantly lower the conditional mean of real output growth and raise those of the price-level gap and inflation, and also raise the conditional variance of all three variables; and (ii) expected real output and price-level outcomes that are obtained without conditioning on asset price booms, or are obtained conditionally on asset price booms using the normal distribution, both underestimate the risk of the worst outcomes occurring and lead to less pessimistic but misleading inferences. These findings are not premised on the ability of central bankers to be able to identify correctly asset bubbles ex ante. One possible implication for monetary policy is that central bankers ought to be wary about the occurrence of any large increase in asset prices and consider an approach that is ex ante more compatible with risk management.

This study assesses the usefulness of money for policy in the Philippines. The basic idea behind the use of monetary aggregates for policy is that observed fluctuations in money anticipate movements in the ultimate objective of monetary policy, such as inflation control. The paper examines the stability of key empirical relationships, including the behavior of velocity and the presence of cointegrating relationships among money and variables of interest to policymakers. In general, results indicate that the stability of velocity and the presence of cointegrating relationships lend some limited support to the potential usefulness of money for policy. The ability of money to predict inflation is examined using Granger causality tests and an unrestricted vector autoregression (VAR) that examines the relative contribution of innovations in money to the variance of the forecast errors in inflation. In general, money's ability to predict inflation is less clear-cut and seems to be dependent on the ordering and lag lengths of the variables used in the VAR and the definition of money used.