Valuation effects of capital inflows: Evidence from emerging market economies

This paper studies valuation changes of capital inflows in 19 emerging market economies (EMEs). In most of the EMEs, we find that there are significant valuation changes and a positive rate of return on external liabilities by foreigners. Furthermore, the nonlinear effects of exchange rate movements on valuation changes are investigated using panel smooth transition regression models. Empirical results show that the transition is centered at approximately −22.3% of exchange rate change, which implies that when the exchange rate appreciates more than this level, foreign investment value gains increase considerably.     

Plant Scale and Exchange‐Rate‐Induced Productivity Growth

This paper examines the impact of exchange rate movements on firm‐level productivity through changes in the scale of production. We employ plant‐level data to examine whether, and in what direction, exchange rate movements affect the scale of production, and how these changes in scale influence productivity. The paper finds that a real appreciation of the domestic currency reduces shipments and this negative effect is larger for exporters (both domestic and foreign owned). The paper also finds evidence that the appreciation‐induced reduction of scale negatively affects productivity at the plant level. This scale effect more than offsets any potential gains from the appreciation‐induced reduction in the price of imported inputs.     

Exchange rate pass-through at the individual product level: Implications for financial market integration

Global and regional integration of financial markets with enhanced international monetary transactions between economic agents increases the exchange rate risk. As this obstacle is growing at speed, market integration should be developed with a view to avoid this risk. In this study, we investigate exchange rate pass-through (ERPT) to examine who takes this risk. Specifically, we estimate the degree of ERPT for individual products by using primary auction price data of used/second-hand construction machinery purchased in Japan and then exported to Thailand for resale. Our empirical analysis of these data at the individual product level enables us to avoid bias in estimating ERPT caused by the use of aggregated data. We find that ERPT is asymmetric and changes in exchange rates are reflected in baht-denominated resale prices only when the baht appreciates against the yen. This indicates that raising resale prices in the destination market is more difficult for the exporters than lowering them, meaning that they can suffer significantly from the exchange rate risk. This paper serves as a reference for a safer financial market by learning how market players are influenced by the exchange rate in a trade market with a unique dataset.     

Small firms and the governance of interorganizational exchange

This article explores some new concepts concerned with the coordination of environmental exchange in small firms. The management of communicative networks is presented as a method supplementary to market steering and administrative coordination of exchange relations. The article is based on the results of in-depth studies of 20 sets of inter-organizational relations in five small firms. The results suggest that the building, maintainance and decoupling of the personal relations in a communicative network affects the costs associated with environmental exchange. Communicative networks make it possible to operate at a higher level of system complexity without increasing the transactions costs or losing any of the small-scale advantages of small firms. In this study the difference between discrete instrumental action and communicative action occupies a central place. Communicative action in networks is based on rationality norms that differ from the pure instrumental action patterns of the marketplace. The manager has to act in accordance with the different personal life spheres of the actors involved. The implications for leader competence managing this kind of relations are discussed.     

Monetary Targets and the World Economy

The dominant obsessions to watchers of the world economy at the moment are the weakness of the US dollar and the fear that the world economy is stagnating. In this ‘Briefing Paper’ we seek to put both events into the same intellectual framework, and to show that they are the consequence of monetary policies which are not logically related to each other, nor to a common objective of bringing world inflation steadily down to an acceptable level. Specifically, the US - which for reasons outlined below can warrant monetary growth rather below the world average if it is to preserve some dollar stability - is showing an above average outturn in its monetary aggregates. Germany and Japan, which can accommodate increases well above the average, are in fact adopting monetary targets which are leading to exchange rate appreciation, arid a reduction in both countries' expectations for real growth. The dangers for the world economy in this situation are very serious, particularly at a time when further dollar devaluation could be risky both from the viewpoint of US inflation wide the dollar's role as the key reserve asset. It could lead at worst to US protectionism and a monetaryled recession, rein forcing the slow growth rates already being widely predicted in 1978 for many other industrial countries. However, we show in this ‘Briefing Paper’ that this is not a necessity outcome of the present situation, given three vital perceptions. The first, required by statesmen as much as by technicians. is that the recent stagnation in European & Japanese output and exchange rate instability are essentially a monetary phenomenon, requiring essentially monetary (rather than fiscal) remedies. The second is acceptance of the need and practicability of some monetary consignation, based on reasonably common objectives among the major countries regarding inflation, bands for exchange rate movement and red rates of growth. the third, at the most practical level, is agreement on the actual monetary numbers which broadly reconcile these objectives and also take account of the very different ‘unwanted’ rates of monetary growth between countries which reflect their different underlying conditions of output, productivity and demand for money. It is the (ambitious) aim of this ‘Briefing Paper’ to substantiate these perceptions and to provide the numbers mound which a consideration of monetary policies can be framed. The numbers are necessarily based on trends established over a number of years and need to be supplemented by detailed understanding of each country's financial status But the monetary targets provided do, in our judgement, embody trade-offs between inflation, growth and exchange rate movements which should broadly satisfy national ambitions, and reset the world economy on a worthwhile growth path during 1978 or 1979.     

The Predictive Ability of Geographic Segment Information at the Country, Continent, and Consolidated Levels

This study examines whether geographic information disclosed at an increasingly disaggregated level (specifically, consolidated vs. continent vs. country) results in increased predictive ability of company operations (specifically, sales, gross profit, and earnings). Multinational corporations (MNCs) are formed using a simulated merger approach by combining the annual operating results of six individual firms, one from each of six countries. This approach makes it possible to compare the forecasting accuracy of data disclosed at the country, continent, and consolidated levels, not possible using current geographic segment disclosures. Previous studies using year-ahead forecast models implicitly assume the predictive factors included in the models are significant in forecasting operating results. Using regression forecast models, this study tests whether the predictive factors included in the models are effective in forecasting operating results by examining the direction, size, and significance of the regression coefficient estimates. The coefficients provide evidence that exchange rate changes, inflation, and real GNP growth are useful in forecasting annual sales and gross profit. Whereas, at least for this sample and this time period, exchange rate changes, inflation, and real GNP growth are not significant variables in forecasting annual earnings. The results indicate that the accuracy of forecasts increase as sales and gross profit are disclosed at a more disaggregated geographic level. The hypothesized relationship between consolidated, continent, and country levels, while holding strongly under perfect foresight, holds to a lesser extent using forecasts of exchange rates, inflation, and real GNP.     

Leader‐Member Exchange,Group‐ and Individual‐Level Procedural Justice and Reactions to Performance Appraisals

Previous research has established that relationships with authority figures and procedural justice perceptions are important in terms of the way in which employees react to organizational procedures that affect them. What is less clear are the reasons why exchange quality with authorities is related to perceptions of process fairness and the role of procedural justice climate in this process. Results indicate that individual‐level perceptions of procedural justice, but not performance ratings, partially mediate the relationship between exchange quality and reactions to performance appraisals, and that procedural justice climate is positively related to perceptions of procedural justice and appraisal reactions. These results support a more relational than instrumental view of justice perceptions in organizational procedures bound by exchange quality with an authority figure. Our study suggests that it is essential for managers to actively monitor and manage employee perceptions of process fairness at the group and individual levels. © 2015 Wiley Periodicals, Inc.     

领导-成员交换如何以及何时影响员工偏离行为?社会控制理论的视角

领导-成员交换是组织人际关系研究的重要组成部分,一直以来受到研究者的广泛关注。然而,当员工作为领导者的"圈内人"时,似乎容易受到领导者的特殊"保护",并从事偏离行为。基于社会控制理论,本研究采用多来源的问卷调查方法,探讨了领导-成员交换的消极面。研究结果表明:高质量的领导-成员交换关系导致员工产生感知偏离容忍,进而导致其偏离行为增加。这一过程又受到员工道德推脱水平的调节作用,即当员工的道德推脱水平较高时,领导-成员交换通过员工的感知偏离容忍正向影响其偏离行为的间接效应显著;当员工的道德推脱水平较低时,上述间接效应不显著。本研究为领导-成员交换提供了更加全面和辩证的研究视角,同时也拓展了社会控制理论、感知偏离容忍和偏离行为的相关研究。除此之外,本研究也为企业管理实践提供了可供借鉴的经验和指导。     

Negative nominal interest rates: Three ways to overcome the zero lower bound

The paper considers three methods for eliminating the zero lower bound on nominal interest rates and thus for restoring symmetry to the domain over which the Central Bank can vary its official policy rate. They are: (1) abolishing currency (which would also be a useful crime-fighting measure); (2) paying negative interest on currency by taxing currency; and (3) decoupling the numéraire from the currency/medium of exchange/means of payment and introducing an exchange rate between the numéraire and the currency; this exchange rate can be set over time to achieve a forward discount (expected depreciation) of the currency vis-à-vis the numéraire when the nominal interest rate in terms of the numéraire is set at a negative level for monetary policy purposes.     

Towards Exchange Rate Stability?

At their recent meeting in Washington the Group of Seven reafirmed their desire to hold exchange rates at about their current level. In this Viewpoint we consider the prospects for success. We conclude that although current rates are feasible in terms of competitiveness, the system will remain under strain as long as there are major inconsistencies between jiscal policy in the US and the rest of the world. The present conjuncture of interest rates and inflation points to a further dollar depreciation. It would be better, in our view, to enact this quickly and to attempt to stabilize exchange rates at sustainable levels: the policy of holding the dollar is misguided.     

Economic Viewpoint: Towards Exchange Rate Stability?

At their recent meeting in Washington the Group of Seven reafirmed their desire to hold exchange rates at about their current level. In this Viewpoint we consider the prospects for success. We conclude that although current rates are feasible in terms of competitiveness, the system will remain under strain as long as there are major inconsistencies between jiscal policy in the US and the rest of the world. The present conjuncture of interest rates and inflation points to a further dollar depreciation. It would be better, in our view, to enact this quickly and to attempt to stabilize exchange rates at sustainable levels: the policy of holding the dollar is misguided.     

The nexus between country risk and exchange rate regimes: A global investigation

Using a sample of 110 countries over the period 1984–2013, this paper examines the impacts of country risks on choosing a specific exchange rate regime (first by utilizing the Levy-Yeyati and Sturzenegger de facto classification and then robusting it by the IMF de jure measurement) relative to other regimes via the panel multinomial logit approach. Empirical findings are as follows. First, in the full samples case we provide evidence that government is more likely to implement a flexible regime, but less likely to adopt a fixed regime, under a low level of composite and financial risk. Second, we find that Eurozone countries are more likely to choose a fixed exchange rate regime with a decrease in the level of country risk and favor a flexible regime in response to a shock from an increase of risk, which is opposite to non-Eurozone countries. Third, we note that high-risk countries are more likely to choose a fixed regime with a low level of composite and political risk in the government, but do not adjust the exchange rate regime as a shock absorber when facing economic and financial risks. It is interesting to see that those countries with relatively low risk display almost opposite results versus high-risk economies. Overall, we believe that it is critically important to account for political economy variables in a government’s exchange rate policy decisions, especially for country risks. All results are robust to the panel ordered probit model.     

The currency of talent management—A reply to “talent management and the relevance of context: Towards a pluralistic approach”

In this paper we provide a commentary on the article in this Special Issue by Thunnissen, Boselie, and Fruytier on the relevance of context to the field of talent management. We concur that a more critical, pluralist approach to talent management scholarship is needed, that talent management should go beyond a mere economic exchange between talent and their employer, and that further research is needed to explore the link between macro, meso and micro level considerations. Thunnissen, Boselie, and Fruytier pose insightful questions about the contribution of talent management to the social and moral development of society and legitimating talent management at meso level. For us, these questions raise issues about the extent to which individual agency in ethical issues is possible in environments designed to regulate and control talent. We suggest that underexplored notions of strategic exchange and individual identity provide a richer picture of the talent employment relationship and raise a number of possible directions for future talent management research.     

News effects in a high-frequency model of the sterling-dollar exchange rate

This paper uses an extremely high frequency data set on the dollar-sterllng exchange rate to investigate the impact of news events on the very short-term movements in exchange rates. The data set is a continuous record of the quoted price for the exchange rate on the Reuters screen. As such it records some 130,000 observations over an 8-week period. The paper investigates the time-series properties of the data using orthodox regression models, and then by making allowance for a time-varying conditional variance. The conclusions vary significantly in moving to this more sophisticated model. The exercises are repeated now incorporating news announcement effects, letting these affect the level of the exchange rate and then the conditional variance process. Again it is found that the conclusions are radically altered in moving to the increasingly sophisticated model.     

Financial Disclosure Levels and Foreign Stock Exchange Listing Decisions

Firms are increasingly listing their shares on foreign stock exchanges. However, not all exchanges have had equal appeal. Anecdotal evidence suggests that when firms are making foreign listing decisions, they are influenced by financial disclosure requirements. As a result, regulatory authorities around the globe are weighing increasing demands for foreign capital and investment opportunities against the desire to protect domestic investors from possibly misleading foreign financial disclosures. The competitiveness of domestic stock exchanges often hangs in the balance.
This study examines a key question in this debate: whether firms' choices regarding alternative foreign stock exchange listings are influenced by financial disclosure levels. Examined are the listings of 302 internationally traded firms with at least one foreign listing, on one of nine major exchanges, as of year-end 1987. Also examined are changes in listings between 1981 and 1987, an important design feature since these changes are more likely to have been influenced by differences across countries in financial disclosure levels during this period. Financial disclosure levels are obtained from a survey of 142 experts actively involved in the foreign listing process.
Test results based on the cross-section of listings at year-end 1987 are consistent with the hypothesis that exchange choices are influenced by financial disclosure levels. However, they do not lend support to a second hypothesis suggesting that this effect should operate only for firms whose domestic disclosure levels are lower than those of a given foreign exchange. Tests based on changes in listings between 1981 and 1987 support both hypotheses. Overall, the results lend credence to concerns expressed by regulatory authorities and exchange officials that stringent disclosure levels could reduce access to foreign capital and foreign investment opportunities.     

Real Balances, the Price Level and the Unit of Account

A bstract It is argued that Patinkin's introduction in his 1956 book of the stability analysis of the price level resulted in great measure from his reading of Wicksell's 1898 Interest and Prices. Both Patinkin and Wicksell based their treatments of the stability of the price level on what Patinkin used to call the "real balance effect." That effect, however, does not operate under Wicksell's assumption of a competitive "pure credit economy", where all transactions are carried out by bookkeeping transfers, and the unit of account is the same unit in which the accounts of banks are kept. In that case, Patinkin showed in the second (1965) edition of his book that the real balance effect–and, by that, the stability of the price level–would still be a feature of the system if profit maximizer banks held reserves, created by the central bank to settle temporary imbalances at the clearinghouse. According to Wicksell, on the other hand, a pure credit economy should consist of a central bank that attracts and remunerates deposits at the same interest rate charged for its loans, plus profit maximizer financial intermediaries that lend money for risky projects. The basic rate of interest set by the central bank decides, accordingly, the price level in such an economy. Wicksell's and Patinkin's approaches differ from the view put forward in the 1980s by the so-called "new monetary economics" that the key to price level stabilization is the separation of the function of money as the unit of account from its function as the medium of exchange in pure accounting systems of exchange.     

Unification of Dual Foreign Exchange Markets

In this paper I investigate the impact of overnight floating of the official rate and easing foreign exchange restrictions on post-unification domestic inflation rate. After analysing the behaviour of an economy under dual foreign exchange markets, an official market with a crawling foreign exchange rate and a free illegal parallel market. The paper also shows that maintaining a unified free exchange rate depends on the degree of foreign exchange restrictions under dual foreign exchange system and on the level of the official reserve that prompts foreign exchange liberalisation policy. This revised version was published online in July 2006 with corrections to the Cover Date.     

汇率波动对外商直接投资的影响 ——基于知识资本模型从产业角度的实证检验

本文运用知识资本模型分别从国别和产业的角度对汇率波动与国际直接投资(FDI)进行实证检验。该模型考虑到资源禀赋对FDI的影响,并将FDI细分为垂直型和水平型;同时,为了使计量更加精确,本文还将模型中汇率的波动分解为一价定律失效导致的波动和不可解释的原因导致的波动;最后,本文还检验了美元盯住制对FDI的影响。结果发现,东道国货币贬值是否有利于吸引FDI取决于该国FDI是以水平型还是垂直型为主,同时,美元盯住制对FDI没有促进作用。     

An input–output model of exchange-rate pass-through

The impact of the exchange rate on price formation is often debated through a mechanism called the exchange-rate pass-through. Studies of the pass-through generally rely on econometric analysis implemented on time series data. This study examines pass-through to the domestic price level through an input–output model. The proposed model is implemented on a sample of countries, and a number of different variables connected to the pass-through are examined. A comparison across countries and sectors highlights the importance of the construction sector in price formation. National income is negatively related to the pass-through. A high dependence on intermediate imports implies higher pass-through. Price level volatility and pass-through are positively related; whereas a country’s monetary policy stance has no apparent effect. The effect of exchange-rate volatility is unclear; it is negative for the real effective exchange rate, the connection is very weak in the case of the nominal exchange rate.     

Dialects,cultural identity,and economic exchange

We study the effect of cultural ties on economic exchange using a novel measure for cultural identity: dialects. We evaluate linguistic micro-data from a unique language survey conducted between 1879 and 1888 in about 45,000 German schools. The recorded geography of dialects comprehensively portrays local cultural similarities that have been evolving for centuries, and provides an ideal opportunity to measure cultural barriers to economic exchange at a fine geographical scale. In a gravity analysis we show that cross-regional migration flows in the period 2000–2006 are positively affected by historical dialect similarity. Using different empirical strategies, we show that this finding indicates highly time-persistent cultural ties that foster economic exchange across regions.