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Products: Hawaii's Economy

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The Contribution of the University of Hawai‘i at Manoa to Hawai‘i’s Economy in 2007

The University of Hawai‘i at Manoa (UHM) had its beginnings in 1907 as a college of agriculture and mechanical arts. In 1912, the first permanent building was erected in Manoa valley in UHM’s current location. With the establishment of the College of Arts and Sciences in 1920, the College of Hawai‘i became a university. Statehood and the establishment of the University of Hawai‘i as the "state university" marked the beginning of a period of accelerating enrollment that resulted in the formation of a large diverse system. In 1965, the State Legislature created a statewide system of community colleges and placed it within the University of Hawai‘i, and in 1972, the flagship Manoa campus became the University of Hawai‘i at Manoa.

UHero Project report


Hawaii Construction Forecast Update:
Global Downturn Hammers Construction

The global credit crisis and deepening recession have materially worsened prospects for the Hawai‘i construction industry. Commercial and resort building are in retreat, hampered by a bleak national outlook and financing constraints. The residential construction downturn will continue as income and wealth losses undermine housing demand. We now expect a deeper ajustment in the local real estate market, although somewhat milder than past Hawai‘i experience and much less severe than the steep contractions in some mainland regions. Government spending initiatives may provide substantial support for the industry in the medium term, but they will provide very little stimulus over the next two years.

forecast Summary


The Passenger Vessel Services Act and America’s Cruise Tourism Industry working paper

The Passenger Vessel Services Act (PVSA), a 123-year old cabotage law, attempts to shield U.S. maritime shipping from foreign competition. It also applies to the U.S. cruise ship industry. The PVSA requires foreign cruise ships that carry passengers between U.S. ports to also stop at foreign ports. Norwegian Cruise Line America (NCLA), which operates one U.S. flagged cruise ship in Hawaii, wants the U.S. Customs and Border Protection to require foreign cruise ships offering Hawaii itineraries from the U.S. west coast to spend more time in foreign ports. We analyze the merits of NCLA’s proposal. We argue that rather than making the PVSA even more protectionist, the law should be repealed.

Published: Mak, J. Sheehey, C. and Toriki, S., 2010. The passenger vessel services act and America's cruise tourism industry. Research in Transportation Economics, 26 (1), 18-26.

working paper version


PBS Hawaii - Island Insights: Focus on Hawaii's Economy

UHERO Executive Director, Carl Bonham joins Howard Dicus, Paul Brewbaker, and Pearl Imada Iboshi on Island Insights

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Taxing Timeshare Occupancy

In this paper, we evaluate the manner in which timeshare occupancy is taxed in the State of Hawaii. Our objective is to ascertain how best to design a timeshare occupancy tax that treats all types of visitor accommodations equitably and enhances tourism’s net economic benefit to Hawaii’s residents. In particular, we address two concerns. First, what is the incidence of the timeshare occupancy tax? Second, what is its appropriate tax base? Answers to these two questions inform optimal timeshare taxation policy in Hawaii and elsewhere in the U.S.

working paper


PBS Hawaii - Everybody's Business: Energy in Hawaii

UH Manoa economics professor Denise Eby Konan joins Howard to talk about energy prices. This conversation originally aired on December 5, 2008 and was recorded in the PBS Hawaii studio.

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PBS Hawaii - Everybody's Business: Health Care and Insurance Issues

 Jerry Russo, chair of the UH Manoa Dept. of Economics, meeds with Hower to review health care and insurance issues.

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PBS Hawaii - Everybody's Business: No Quick Recovery from Recession in Hawaii

 Carl Bonham, discusses the UH forecast which says there will be no quick recovery from recession in Hawaii

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Hawaii Economic Forecast Update:
No Quick Recovery from Hawai‘i Recession

The global financial crisis and widening global downturn have materially worsened prospects for the Hawai‘i economy. Economic conditions are now poor in virtually every visitor market, and as a result we expect the current sharp tourism downturn to continue well into next year, with no significant recovery until 2010. Moderate contraction of the construction industry and the developing state fiscal crunch will also weigh on the local economy. The Hawai‘i economy is now in recession, and as the downturn continues into 2009 we will see larger job and income losses than we have experienced to date.

forecast Summary


Global Economic Forecast:
Crisis Contagion Spreads Global Recession

The unfolding financial crisis will cause the deepest slowdown of global growth in many years. In 2009, the rich world will be in recession, and developing economies will suffer a sharp reduction in growth rates. The anticipated depth and duration of recession in the U.S. and Japan will present additional challenges for Hawai‘i’s ailing visitor industry and the overall local economy.

forecasT Summary


Hawaii Economic Forecast Update:
A Hard Fall for Hawai‘i Tourism

The U.S. downturn and record-high oil prices have taken a big bite out of the Hawai‘i tourism industry. Visitor arrivals will tumble 9% this year, the biggest annual decline since 2001. Because of deteriorating conditions for the U.S., Japanese and global economies, we now believe that a visitor industry recovery will not begin until 2010. While economic statistics for the aggregate economy this year are coming in a bit better than expected, this will not last. With the steep tourism downturn, ongoing slowing in construction, and a developing state fiscal crunch, the Hawai‘i economy is in for a weak 2009.

Forecast Summary


Hawaii Construction Forecast:
Construction Downturn Milder than Mainland

Hawai‘i’s construction sector is now on the downward side of the cycle, but slowing continues to be considerably more moderate than in many U.S. mainland markets. The current business cycle slowdown, increased land and construction costs (mostly due to a surge in commodity prices), together with tighter credit conditions present challenges for new construction in the islands. Local non-residential construction and military housing renovation projects are helping to moderate the cyclical downturn.

ForecasT Summary


Hawaii Economic Forecast Update:
Oil Surge Fuels Inflation, Threatens Deeper Downturn

Prospects for the Hawai‘i economy have worsened significantly since our March Annual Hawai‘i Forecast. The failures of ATA and Aloha airlines, the loss of a second NCL cruise ship, and the dramatic surge in oil prices will damage a local economy that was already feeling the effects of the national downturn. We now expect small net declines in both real income and jobs this year, and higher 5% inflation. A significant recovery of the local economy will not begin until 2010, making this a relatively shallow but lengthy Hawai‘i economic contraction. A deeper slowdown could occur if oil prices remain at their current record levels or if the national housing slump worsens more than expected.

forecast Summary


Financial Integration in the Pacific Basin Region: RIP by PANIC Attack?

We exploit advances in panel data econometrics to test whether real interest parity holds in the Pacific Basin region. We test for a unit root in the difference between either the US, Japanese or Euro area real interest rate and the real interest rates from a panel of eleven Pacific Basin economies. Unlike extant studies which test for RIP using panel data, we use Bai and Ng’s (2004) PANIC test which allows for a very general model of cross-section dependence, including the possibility of cross-unit cointegration. Ignoring the possibility of cross-unit cointegration can lead to severe size distortions and to an over-rejection of the null hypothesis of a unit root. We overturn earlier findings based on first generation panel tests, and demonstrate that cross-unit cointegration lead to incorrect conclusions. We find that RIP holds in the Pacific region. Real interest rates converge to the US rate. We find no support for the hypothesis that Pacific Basin real interest rates converge to either the Japanese or Euro area rates.

Published: “Financial Integration in the Pacific Basin Region: RIP by PANIC Attack?” with Somchai Amornthum, Journal of International Money and Finance, Vol. 30, October 2011, 1019-1033.

working paper


County Economic Forecast:
Zero Growth Expected Statewide

To varying degrees, each of the four counties has shared in the state’s broad pattern of slowing over the past several years, a process that becamemore pronounced in 2007. This synchronized slowing is nomistake, reflecting broad statewide—and even global—slowing trends in construction, visitor spending and overall economic activity. There are similarly common adverse developments that will influence the county economies over the next several years. These include the failures of Aloha Airlines and ATA, the loss of two NCL cruise ships, a weak external environment for tourism, and the turning of the statewide construction cycle. This year, job and real income growth will fall in a fairly tight range around 0% in each of the four county economies. Our expectation is that it will be several years before the islands return to a moderate pace of economic expansion.

forecast Summary


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