I am glad to share with you, the esteemed readers, that The IUP Journal of Applied Economics (IJAE) has completed six years of striking progress with its presence in RePEc, www.cabells.org, SOSIG and SSRN. Without the support of authors and reviewers, the IJAE would not have achieved this standing among academia. On behalf of the editorial board, I would like to thank all the authors and reviewers.

Economists believe that currency crisis, inflation, credit ratings, and a host of variables influence the economic activity. The current issue addresses how these variables influence the economic activity and what the policy implications are.

The first paper, "Currency Crisis, Inflation and Stability of Demand for Broad Money: The Case of Indonesia", examines the implications of the currency crisis on inflation and demand for broad money in Indonesia following the Asian financial crisis. The authors use multivariate cointegration methodology and find the existence of a stable long-run relationship between demand for broad money (M2) and its determinants (cointegrated) in spite of a structural break during the Asian financial crisis. The authors also find that the changes in M2, exchange rate depreciation, and domestic and foreign interest rates have a significant impact on inflation, both before and after the financial crisis. The authors observe the presence of inflation inertia in Indonesia after the financial crisis, and discuss its policy implications in terms of macroeconomic stabilization in the economy.

The second paper, "Sovereign Credit Ratings and Macroeconomic Variables: An Empirical Analysis on Dynamic Linkages in Malaysia Using Bound Test Approach", investigates the long- and short-run relationship between sovereign credit ratings and macroeconomic variables in Malaysia by employing quarterly data from 1991 to 2004. The results indicate that in the long run, debt to GDP, debt service to reserve and the US Treasury Bill rate (3 months) appear to have a significant impact on Malaysia's sovereign credit ratings. The findings of the study suggest that Malaysia's long-term ability to pay its debt contains information for the prediction of the credit rating.

The third paper, "Income and Price Elasticities of Exports in Philippines", examines the elasticities of export demand for the Philippines using Johansen time series technique. The study reveals that the income elasticity of exports is unity and the relative price elasticity is significant. The study concludes that long run income and relative price elasticities have important implications for export growth policies.

The fourth paper, "The Effects of Life Expectancy on Fiji's Output: A Time Series Approach", discusses the specification and estimation issues in the time series approach to the determinants of output. In the study, the authors have developed a framework to estimate the effects of some key determinants of output, besides the factor inputs. They have demonstrated, with time series data from Fiji, how to estimate the effects of life expectancy on output together with two other key variables—education and openness of the economy.

The last paper, "Input-Specific Risk in HYV and Traditional Paddy Cultivation: An Analysis of Agricultural Practices in Assam", examines the relative risk associated with High Yielding Varieties (HYV) and traditional paddy cultivation based on farm household level data in Assam. An econometric estimation approach is adopted for this purpose. A generalized stochastic production function approach and a three-stage estimation procedure suggested by Just and Pope (1979) are used on the sample data. The estimation is done to examine the marginal effect of essential and less essential inputs on the average yield and the variance of yield in traditional and HYV paddy cultivation. Seeds, labor, and capital are the essential inputs. Chemical fertilizers, plant protection chemicals and irrigation from borewells and pumpsets are treated as less essential inputs. The results of the study suggest that input-specific risks of all the inputs considered in the study were found to be of minor importance in all seasons in both HYV and traditional paddy cultivation. The authors also opine that a large part of the yield variability remained unexplained by the inputs considered in their model.

- S V Seshaiah
Consulting Editor