Three Esays on Empirical Macroeconomics Open Access
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The issues in my research range broadly from inflation in Japan, money demand in Cambodia and Lao P.D.R., to electricity demand in the Philippines. Although these topics vary, the key issues addressed are quite relevant for critical macroeconomic stability issues in these countries. Essay I (Revising Japanese Inflation Modeling) analyzes the inflation process in Japan. Japanese inflation has remained around zero percent since the late 1990s. This is puzzling, particularly given that none of inflationary factors, such as sustained economic growth and the accommodative monetary policy stance has raised inflationary pressures. I model and perform encompassing tests of the inflation process using a Phillips curve markup framework, separately examining the tradable and non-tradable sectors, and a monetary. My results suggest there has been a structural change in the inflation process.Essay II (Money Demand, Dollarization, and High Inflation in Cambodia and Lao P.D.R.), investigates local currency demand functions for Cambodia and Lao P.D.R. I employ the Autoregressive Distributed Lag bounds testing approach. Both countries have shared similar historical characteristics, experiencing substantial macroeconomic instability during the 1990s and the high degree of dollarization. My empirical analysis finds a long-run relationship between real money and inflation or a change in exchange rates in Lao P.D.R., but not in Cambodia. Dollarization has been reversed in Lao P.D.R. when policymakers are committed to macroeconomic stability. The observed relationship is not found in the Cambodian data. In Cambodia, dollarization has continued to increase.In Essay III (Modeling Electricity Demand in the Philippines), I develop models for the residential and industrial electricity sectors. I use the Johansen cointegration and vector error correction methodology to estimate the long-run and short-run price and income elasticities. The results suggest there is a long-run cointegrating relationship in the residential sector between consumption, income, and stock of electric appliances. In the industrial sector, I find a relation between consumption and GDP on a per worker basis. I compare my model to government's official forecast for electricity demand and find it to be at the upper bound of my forecast range.