- KIEP presents 2017 EAER Best Paper Award to Douglas H. Brooks (Asian Development Bank), Elvira Kurmanalieva (Eurasian Development Bank) and Doo Yong Yang (Kyunghee University).

  The Korea Institute for International Economic Policy (KIEP) has selected the paper “Trade, Trade Finance, and Global Liquidity in Asia: Markov-Switching FAVAR Approach,” co-authored by Douglas H. Brooks (Asian Development Bank), Elvira Kurmanalieva (Eurasian Development Bank) and Doo Yong Yang (Kyunghee University) for 2017 EAER Best Paper Award. 

  As a quarterly journal published by KIEP, the East Asian Economic Review (EAER) annually selects and announces the winner of its Best Paper Award, with the purpose of building stronger theoretical foundations and advancing interdisciplinary research in the field of international economics.

  The 2017 Best Paper Award Selection Committee, composed of six members, reviewed 16 papers published between 2016 and 2017. The committee applied four criteria of excellence for selection: academic contribution, research originality, logical clarity, and policy implications. The Selection Committee members each submitted their choices for the three best papers, using a scale of 1 to 3 points. As a result of this process, the paper written by Douglas H. Brooks, Elvira Kurmanalieva and Doo Yong Yang received the highest score and hence was recommended as 2017 best paper by the majority of the Committee.

  In their paper the authors analyze an important question of why world trade collapsed after the Global Financial Crisis. Using the methodology of FAVAR, the authors argue that the dynamics between trade and trade finance served as an important factor behind the collapse. The findings of this paper are important because they will be relevant for the process the world will recover from this recession and move back to a new steady state for the level of world trade.

  Up to now the most convincing explanations provided by international trade economists and macro economists have been: 1) changes in the demand composition of developed economies (the declining share of durable consumption and investment as well as the increasing share of services), and/or 2) decline in world trade related to Global Value Chains (GVC). However, these perspectives cannot properly explain the quick recovery of world trade towards the long-term trajectory from the “collapse” in 2009. One of the main findings of this paper is that trade finance mattered. In addition to this contribution, the paper’s research method shows academic seriousness by employing adaptive-FIGARCH model, which serves very well for the purpose of empirical analysis in order to consider the long memory property and structural breaks simultaneously.

  The award ceremony was held on 22nd December, 2017 at the Korea Institute for International Economic Policy (KIEP).