Template-Type: ReDIF-Article 1.0 Author-Name: Emmanuel S. de Dios Author-Workplace-Name: University of the Philippines School of Economics Title: Nationalism and the Strong State in the 1935 Philippine Constitution Abstract: A strong executive branch and nationality-requirements on specific areas of the economy are two ideas contained in provisions of the Philippine Constitution of 1935 that have been carried over into the country’s subsequent charters. Using the record of debates during the convention, this article traces the inspiration for these provisions to prevailing intellectual and historical trends. In particular, the rise of socialist and fascist states in Europe and Latin America, as well as the post-Depression New Deal in the US was apprehended by the delegates as clear signs that the tide was turning against the laissez-faire ideology of liberal-capitalism. At the same time the strong-state idea was congenial to the delegates’ concern to reserve to the government areas of patrimony that Filipino capital of the time was incapable of exploiting on their own. Classification-JEL: K10, N45 Keywords: nationalism, strong state, economic policy Journal: Philippine Review of Economics Pages: 1-19 Volume: 39 Issue: 1 Year: 2002 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/53/556 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:39:y:2002:i:1:p:1-19 Template-Type: ReDIF-Article 1.0 Author-Name: Carlos C. Bautista Author-Workplace-Name: College of Business Administration, University of the Philippines Diliman, Quezon City Title: Boom-Bust Cycles and Crisis Periods in the Philippines : A Regime-Switching Analysis Abstract: This study examines Philippine macroeconomic fluctuations using Markov regime-switching techniques. Using all available GDP data, an annual and a quarterly model are constructed to explain Philippine boom-bust cycles as switches into any of three states — a moderate growth state, a low growth state and a crisis state. The number and labeling of states are based on historical events. The annual model shows adequate tracking ability. The quarterly model reveals a finer classification of the bust phase into low growth states and crisis states for the 1990-decade — a result that does not appear in the annual model. The crisis dates determined by the quarterly model closely correspond to the four crisis episodes that occurred between 1981 and 1999. Classification-JEL: E32, O11 Keywords: Boom-bust cycles, macroeconomic fluctuations, Markov regime-switching Journal: Philippine Review of Economics Pages: 20-37 Volume: 39 Issue: 1 Year: 2002 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/54/559 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:39:y:2002:i:1:p:20-37 Template-Type: ReDIF-Article 1.0 Author-Name: J.M. Ian S. Salas Author-Workplace-Name: University of the Philippines School of Economics Title: Asymmetric Price Adjustments in a Deregulated Gasoline Market Abstract: This paper employs ordered probit, partial adjustment, and vector error correction models to characterize price adjustments in the Philippine retail gasoline market since its deregulation. It finds that pricing decisions of oil firms depend significantly on eight weeks of previous changes in crude cost. It shows that the speed of adjustment of retail prices to their long-run equilibrium relation with crude cost has been following an accelerating trend but is vulnerable to intervening factors. Lastly, it provides empirical evidence that pump prices respond more quickly and fully to increases in crude cost rather than to decreases. Classification-JEL: D40, L11, L81 Keywords: Asymmetric pricing, deregulation, gasoline, pricing behavior Journal: Philippine Review of Economics Pages: 38-71 Volume: 39 Issue: 1 Year: 2002 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/55/560 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:39:y:2002:i:1:p:38-71 Template-Type: ReDIF-Article 1.0 Author-Name: Ruperto P. Alonzo Author-Email: rpalonzo@up.edu.ph Author-Workplace-Name: University of the Philippines School of Economics Title: The Economic Freedom Index : A Review Abstract: The economic freedom index (EFI) is one of several cross-country yardsticks that incorporate dimensions of progress and well-being that go beyond what conventional economic indicators tell us. It is a composite of 21 indicators that include “personal choice, protection of private property, and freedom of exchange.” It is one of the few measures where the Philippines ranks higher than most of its neighbors; the Philippines was in fact 29th among 123 countries rated for 1999, while neighboring Taiwan was only 38th, South Korea 43rd, Thailand 53rd, Malaysia 57th, and Indonesia 72nd. This paper begins with a review of the methodological considerations in index construction such as the use of value weights and linear versus nonlinear aggregation techniques. Outcomes for the Philippines in each of the EFI’s seven areas of concern (together with their respective components) are then closely examined in terms of the validity and timeliness of the data used and the relevance of the indicators themselves in measuring “economic freedom.” It is found that the ranking of the Philippines would even improve if the raw data on some concerns were updated. The review ends with a brief discussion of the “more comprehensive” economic freedom index and notes that the most significant and perhaps most controversial among the new index components is that on labor market flexibility, where non-enforcement of minimum wage legislation is considered a plus, while non-enforcement of all other laws is considered a minus. Classification-JEL: A12, A13, D60 Keywords: Economic freedom, indicators, index construction Journal: Philippine Review of Economics Pages: 72-102 Volume: 39 Issue: 1 Year: 2002 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/56/564 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:39:y:2002:i:1:p:72-102 Template-Type: ReDIF-Article 1.0 Author-Name: Roehlano M. Briones Author-Email: rbriones@admu.edu.ph Author-Workplace-Name: Ateneo de Manila University, Quezon City Title: Interlinked Credit Relational Contracting and the Spread of Rural-Based Manufacturing : The Case of Garment and Metalcraft Industries in the Philippines Abstract: Subcontracting arrangements based on relational contracting between urban traders and rural-based manufacturers provide an important means for spreading manufacturing in rural areas. Within these arrangements, the payment of advances is a form of credit interlinking that addresses the isolation of rural-based enterprises from the formal finance sector. This viewpoint motivates specification of a testable hypothesis: advance payments are greater the more remote a rural-based subcontractor is from the urban center. The paper shows that such a hypothesis can be derived from a simple principal-agent model of the subcontracting relation. Moreover, the hypothesis is empirically confirmed by multivariate analysis of data from a case study of garment and metalcraft industries in the Philippines. The finding supports the view that subcontracting arrangements may be an organizational form appropriate to rural industrialization. Classification-JEL: G20, F13, O19 Keywords: Interlinked contracts, rural industrialization Journal: Philippine Review of Economics Pages: 103-120 Volume: 39 Issue: 1 Year: 2002 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/57/562 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:39:y:2002:i:1:p:103-120 Template-Type: ReDIF-Article 1.0 Author-Name: Joel C. Yu Author-Workplace-Name: College of Business Administration, University of the Philippines Diliman, Quezon City Title: A Test of the CAPM on Philippine Common Stocks Abstract: This paper presents the results of an empirical test of the capital asset pricing model (CAPM) on the returns on Philippine common stocks from 1990 to 2000. The test uses the two-step cross sectional regression (CSR) procedure to compute for the beta of each asset and the parameters of the Sharpe-Lintner version of the CAPM. The basic data used in the study consist of average monthly returns of 50 representative common stocks drawn from a stratified random sampling process. Test results show that there are sub-periods that support the predictions of the CAPM, but other sub-periods yield results that run counter to the CAPM predictions. These results are unaltered after incorporating the Shanken correction factor that addresses the error-in-variables problem inherent in CSR. Further tests also show that, in the short run, factors other than risk explain the cross section of asset returns and that the relationship between return and risk may not be linear. Classification-JEL: G12, C31 Keywords: Asset pricing, capital asset pricing model Journal: Philippine Review of Economics Pages: 121-141 Volume: 39 Issue: 1 Year: 2002 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/58/563 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:39:y:2002:i:1:p:121-141 Template-Type: ReDIF-Article 1.0 Author-Name: U-Primo E. Rodriguez Author-Name: Roehlano M. Briones Author-Email: rbriones@admu.edu.ph Author-Workplace-Name: Ateneo de Manila University, Quezon City Title: The Ateneo Macroeconomic and Forecasting Model Abstract: The Ateneo Macroeconomic and Forecasting Model (AMFM) is a small quarterly macroeconometric model of the Philippine economy. Designed for forecasting and policy analysis, the model generates results for key macroeconomic indicators. The underlying structure of the AMFM is similar to the short run version of Murphy model of Australia. It incorporates Keynesian elements which capture the slow adjustment of prices and unemployment. It also integrates some of the optimizing behavior that is commonly found in Neoclassical economics and in the long run version of the Murphy model. The stochastic equations of the model were estimated using ordinary least squares. In the specification search, each equation was evaluated on three criteria. First, the coefficient estimates must be consistent with economic theory or a priori expectations. Second, each equation should track actual data well. Finally, each equation must pass a series of statistical tests. Despite being at an early stage of model development, the AMFM as a whole tracks historical data on key macroeconomic aggregates reasonably well. This is supported by the low root mean square errors and mean absolute percentage errors of the variables. Classification-JEL: E17, D58 Keywords: Macroeconometric models, Philippine economy Journal: Philippine Review of Economics Pages: 142-178 Volume: 39 Issue: 1 Year: 2002 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/59/565 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:39:y:2002:i:1:p:142-178