Template-Type: ReDIF-Article 1.0 Author-Name: Gerardo P. Sicat Author-Workplace-Name: University of the Philippines Title: Benito Legarda, Jr.: in his own words and an appreciation Abstract: This remembrance is written in two parts. In the first part, Dr. Benito Legarda Jr. writes mostly in his own words. We engaged in numerous exchanges by correspondence that he initiated as reactions to my weekly column on economic and social issues and other topics in the Philippine Star. In these exchanges, he parlayed his knowledge and perspectives as an economist, economic historian, and Filipino. Included in this section is the text of a short talk he delivered on the occasion of the launch of a book I wrote about another man of stature, former Prime Minister and Finance Minister Cesar E. A. Virata. Despite some references to me and my own work (for which I apologize to the reader), it is reproduced in full because in this talk, he reveals so much little-known biographical information about himself in his own words. The second part of this essay is my own appreciation of him. We were long-time professional contemporaries in our service in the government and post-retirement. We worked almost in the same milieu and contemporary environment, although in different capacities and institutions. Classification-JEL: Keywords: Journal: Philippine Review of Economics Pages: 1-34 Volume: 57 Issue: 2 Year: 2020 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/999/907 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:57:y:2020:i:2:p:1-34 Template-Type: ReDIF-Article 1.0 Author-Name: Cesar E.A. Virata Author-Workplace-Name: University of the Philippines Title: Dr. Benito Legarda, Jr. as economic diplomat Abstract: I first met Benito Legarda—Beneting as he was known by friends—as a member of the Junior Chamber of Commerce of the Philippines, the Jaycees. After graduating with a PhD from Harvard University, upon the encouragement of Leonides Virata who met him in Rome, he joined the Department of Economic Research (DER) of the Central Bank of the Philippines (CBP). He started as an economist but he was to climb the career ladder to end up Deputy Governor until his retirement. It was Leonides Virata, who was the first Central Bank head of the DER and who happened to be my uncle, who told me about him. Classification-JEL: Keywords: Journal: Philippine Review of Economics Pages: 35-45 Volume: 57 Issue: 2 Year: 2020 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/998/908 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:57:y:2020:i:2:p:35-45 Template-Type: ReDIF-Article 1.0 Author-Name: Jeffrey G. Williamson Author-Workplace-Name: Harvard University, University of Wisconsin Madison, University of the Philippines Title: Economist, historian, and patriot: Benito J. Legarda 1926-2020 Abstract: One afternoon about twenty-five years ago, there was a knock on my Harvard office door, and Benito Legarda walked into my life. Ben had written his Harvard economics PhD thesis in the early-mid 1950s and then launched his career in central banking and financial policy. Meanwhile, his thesis on nineteenth-century Philippine trade and development was resting comfortably in the archives, where it was soon discovered by scholars and eventually became widely cited. Upon “retirement” some forty years later, Ben had the good fortune to meet up with Henry Rosovsky, a well-known quantitative economic historian who was famous for his Kuznets-like seminal work on Japan. By the 1990s and their meeting, Rosovsky had been chairman of Harvard’s economics department, dean of Harvard’s Faculty of Arts and Sciences, and had become the retired doyen of the Harvard community. Ben told me that Rosovsky had advised him about retirement life: “Now that you’re retired, Ben, why don’t you return to academic research? Indeed, why don’t you revise your thesis for publication? And if you decide to do so, you should go knock on Jeff Williamson’s door. I hear he has interests in the Philippines that stretch back to his participation in a Ford Foundation teaching program at the University of the Philippines School of Economics in the late 1960s.” Thus, the knock on my door some twenty-five years ago. Classification-JEL: Keywords: Journal: Philippine Review of Economics Pages: 46-48 Volume: 57 Issue: 2 Year: 2020 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/1000/909 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:57:y:2020:i:2:p:46-48 Template-Type: ReDIF-Article 1.0 Author-Name: Yusuke Takagi Author-Workplace-Name: National Graduate Institute for Policy Studies (GRIPS) Title: The nexus of nationalism and internationalism: the journey of a “diplomat” after the galleons Abstract: After the galleons, Benito J. Legarda’s masterpiece on socioeconomic transformation after the galleon trade, has enriched our knowledge of the semi-open colonial economy in the 19th-century Philippine Islands, which witnessed the rise of nationalism at the end of that century. In this paper, I shed new light on the nature of the Ilustrados’ nationalism and their international activism by revisiting the life of the country’s “first diplomat”, Felipe Agoncillo, who battled in vain to achieve independence through a diplomatic channel. While class politics tends to be a focal point of the scholarly debate over the Ilustrados’ nationalism, this paper highlights the international dimensions of their advocacy. Agoncillo’s mission in the United States and Europe seems a reasonable option from our perspective, which has been shaped by the norm of modern diplomacy, but it was a risky adventure considering the overwhelming influence of imperialism. Why did Agoncillo conclude they had to send a mission? What kinds of negotiation strategies did they have? Combining Legarda’s global insights on the Philippines’ colonial economy with Agoncillo’s ideational and actual travel, this paper reveals how Philippine nationalism and internationalism created a nexus whose legacy exists in current Philippine diplomacy, one of whose achievements was the award of the arbitration case over the South China Sea in 2016. Classification-JEL: N40, N45, F50, F54, F68 Keywords: nationalism, internationalism, Felipe Agoncillo, diplomacy Journal: Philippine Review of Economics Pages: 49-68 Volume: 57 Issue: 2 Year: 2020 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/1001/910 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:57:y:2020:i:2:p:49-68 Template-Type: ReDIF-Article 1.0 Author-Name: Maria Serena I. Diokno Author-Workplace-Name: University of the Philippines Title: The Bullinger Pool in Burma, 1921 to the mid-1930s Abstract: One of the most important developments in the history of the rice trade of colonial Burma was the creation of the Bullinger Pool in 1921, a combination of four large British milling and export firms based on a common price policy for the purchase and sale of paddy and rice. These firms dominated the rice trade at a time when paddy was the “true currency” of the country [Binns 1948:50]: as the source of livelihood for the majority and the form of payment for rent, loans, and wages. The collective position of the four companies—Steel Bros. and Co., Ltd., Bulloch Bros. and Co., Ltd., Ellerman’s Arracan Rice and Trading Co., Ltd., and Anglo-Burma Rice Co., Ltd.—reached such magnitude in the rice trade that by the 1930s, the conglomerate had become the subject of a legislative inquiry and the object of organized Burmese protest. The accusation against the Pool was that it manipulated prices in order to rake in huge profits, especially at the time of economic depression in the early 1930s. Even if the allegations of what one today might consider unfair trade practice were officially dismissed, as they were, the paper demonstrates that the Pool’s primary advantage, especially its access to paddy supplies, was the cornerstone of its position in the rice trade, making any measure of control plausible at the least. Since the relationship between paddy and rice prices was crucial to the industry’s pricing mechanism, the existence of a combination to set prices for both paddy and rice in the local market made the industry vulnerable to manipulation. Classification-JEL: N75 Keywords: rice trade, Bullinger Pool, economic history Journal: Philippine Review of Economics Pages: 69-92 Volume: 57 Issue: 2 Year: 2020 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/1002/911 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:57:y:2020:i:2:p:69-92 Template-Type: ReDIF-Article 1.0 Author-Name: Eloisa T. Glindro Author-Workplace-Name: Bangko Sentral ng Pilipinas Author-Name: Marites B. Oliva Author-Workplace-Name: Bangko Sentral ng Pilipinas Title: The BSP’s journey towards a progressive monetary policy framework Abstract: This paper examines the evolution of monetary policy framework in the country. It starts the journey with the establishment of the central bank after the Second World War, when there was still no active monetary policy as the country operated on a fixed exchange rate system and supply-led credit programs. The paper describes the challenges with the implementation of monetary policy reforms in the 1980s, particularly the shift to a “managed float” exchange rate system and the adoption of monetary aggregate targeting framework in the context of deregulation and liberalization. It further discusses the development of monetary policy framework and operations, following the creation of an independent Bangko Sentral ng Pilipinas (BSP) in 1993, with the primary mandate of maintaining price stability. It provides a narrative on how the monetary aggregate targeting framework was modified to its eventual shift to an inflation targeting (IT) framework. It highlights the relative success of IT and discusses the innovative approaches undertaken by the BSP to further enhance liquidity management. Moving forward, the BSP’s monetary policy framework and operations will likely continue evolving and serving as steady anchors of macroeconomic stabilization. This will be guided by foresight, commitment to action and helpful lessons from the past, in the context of increased uncertainty. Classification-JEL: E3, E4, E5 Keywords: monetary policy, inflation targeting, monetary targeting, inflation, interest rates, exchange rate, central banking, Philippines Journal: Philippine Review of Economics Pages: 93-115 Volume: 57 Issue: 2 Year: 2020 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/1004/912 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:57:y:2020:i:2:p:93-115 Template-Type: ReDIF-Article 1.0 Author-Name: Margarita Debuque-Gonzales Author-Workplace-Name: Philippine Institute for Development Studies Title: Policy responses to shocks and monetary effectiveness under inflation targeting: The Philippine case Abstract: This article examines how monetary policy responses to economic shocks and monetary policy effectiveness have changed in the Philippines since inflation targeting was implemented in 2002. The study makes use of a structural vector autoregression to estimate financial and monetary policy shocks, among other shocks, based on an identification strategy similar to Gilchrist and Zakrajsek [2012] and Bassetto et al. [2016]. A Philippine financial conditions index (FCI) purged of monetary influences then decomposed according to instrument or market is used to aid estimation and analysis. Results of the recursive vector autoregressions (VAR) comparing pre-inflation-targeting and inflation-targeting periods reveal stronger and more systematic policy responses to non-financial demand shocks, partial and transitory accommodation of supply shocks, and greater exchange rate flexibility initially under the new monetary policy regime. There is, however, an observed weakening of monetary policy responses to financial disturbances and monetary policy transmission to growth likely related to episodes of strong capital inflows. Classification-JEL: C32, E31, E42, E44, E52, E58 Keywords: central banks, inflation targeting, monetary policy, Philippines, structural VAR Journal: Philippine Review of Economics Pages: 116-145 Volume: 57 Issue: 2 Year: 2020 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/1005/913 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:57:y:2020:i:2:p:116-145 Template-Type: ReDIF-Article 1.0 Author-Name: Maria Socorro Gochoco-Bautista Author-Workplace-Name: University of the Philippines Title: Global liquidity, global risk appetite, and the risk of credit and asset booms Abstract: This study examines the channels through which net cross-border bank flows and VIX, working through the domestic banking system, could potentially lead to the creation or exacerbation of credit and asset booms that may threaten financial stability. It uses bank firm-level data for the Philippines over the period 1991-2018. Among the study’s significant findings are the following: bank lending to the real estate and housing sector is consistently and significantly affected by net cross-border bank flows (NCBF); non-core bank liabilities is an important variable as it consistently affects the amount of total loans and loans to the commercial and industrial sector as well as bank asset growth and bank leverage; net cross-border flows lower bank asset growth; and banks’ cost of loans tends to be reduced by NCBF and by a reduction in global risk appetite. The use of macroprudential measures-including monitoring bank non-core liabilities and lending to sectors such as real estate-as well as capital flow management measures is warranted in order to prevent bank credit and asset booms from being created or exacerbated, which may threaten growth and financial stability. Classification-JEL: E4, E5, E6, F3, F4, F6 Keywords: asset booms, credit booms, financial stability, cross-border bank flows, VIX, bank firm-level data Journal: Philippine Review of Economics Pages: 146-169 Volume: 57 Issue: 2 Year: 2020 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/1003/914 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:57:y:2020:i:2:p:146-169 Template-Type: ReDIF-Article 1.0 Author-Name: Delano S. Villanueva Author-Workplace-Name: Bangko Sentral ng Pilipinas Author-Name: Roberto S. Mariano Author-Workplace-Name: University of Pennsylvania Title: Optimal saving and sustainable foreign debt Abstract: This paper develops and discusses an open-economy growth model in a modi!ed Arrow learning-by-doing framework, in which workers learn through experience on the job, thereby increasing their productivity. Applying optimal control to maximize the discounted stream of intertemporal consumption, the model yields domestic saving rates of 18-22 percent of GDP, which are feasible targets in developing and emerging market economies. Sustainable gross foreign debt is in the range of 39-50 percent of GDP. Saving, debt, and growth policies are suggested. Classification-JEL: E130, O410 Keywords: Neoclassical growth; open economy; learning-by-doing; optimal control; growth policies Journal: Philippine Review of Economics Pages: 170-199 Volume: 57 Issue: 2 Year: 2020 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/1006/915 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:57:y:2020:i:2:p:170-199 Template-Type: ReDIF-Article 1.0 Author-Name: Roberto S. Mariano Author-Workplace-Name: University of Pennsylvania, Department of Economics Author-Name: Suleyman Ozmucur Author-Workplace-Name: University of Pennsylvania, Department of Economics Title: Fighting COVID-19: patterns in international data Abstract: This paper provides an empirical evaluation of countries’ performance in !ghting COVID-19, utilizing a performance index (which we call the Disaster Index) based on four health and economic indicators: deaths per population size, deaths per con!rmed cases, and quarterly real gross domestic product (GDP) and monthly unemployment rate relative to pre-pandemic values. International data patterns are studied for these four indicators and the Disaster Index to analyze trends and basic empirical relationships. The approach is descriptive and primarily based on graphs, scatter diagrams, and correlation analysis. The ten best performers based on the Disaster Index for the !rst half of 2020 were (ranked 1st to 10th): Singapore, Taiwan, Belarus, Korea, New Zealand, Japan, Norway, Israel, Czechia, and Lithuania. The worst twelve performers were (bad to worst): Sweden, US, Canada, Philippines, France, Columbia, Spain, Belgium, United Kingdom, Ecuador, Italy, and Peru. Thus, high-income Asian countries performed relatively better than low-income Asian countries, European, and American countries in the !rst half of 2020. Reasons for this geographical divide are very important and must be studied more carefully and closely, as successful methods in better performing countries will provide some lessons for other countries. It also would be interesting to see how this Disaster Index pro!le shifts in 2021 as vaccination and economic relief accelerate in countries like the United States. The pandemic exhibited the vulnerabilities in the world and reemphasized the vital signi!cance of international coordination and cooperation in a globalized world. Recent trends show that most countries still have a long way to go to control the virus. Vaccination is a reassuring fresh hope, a potential game-changer, though requiring careful, painstaking, and timely implementation. Classification-JEL: C00, E00, F00, I1, O57 Keywords: COVID-19, Disaster Index, data patterns, trends, correlations, cluster analysis Journal: Philippine Review of Economics Pages: 200-223 Volume: 57 Issue: 2 Year: 2020 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/1007/916 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:57:y:2020:i:2:p:200-223