Exchange Market Pressure and Monetary Policy in Emerging Market Economies: New Evidence from Treatment‐effect Estimations

The way central banks react to exchange market pressure is likely to affect the subsequent economic development and the associated economic costs. In a situation of currency pressure the central bank can in principle decide to let the currency float freely, to maintain the peg or to implement a managed float policy, i.e. a mix of depreciation and intervention. As the central bank's choices are subject to self selection and endogeneity, we use propensity score matching to adequately cope with these methodical challenges. We find that monetary authorities have two options to keep down the economic costs in terms of output, namely stabilizing the exchange rate or letting the currency float freely. In contrast, a managed float under currency pressure is accompanied by the worst possible outcome with an average loss of gross domestic product (GDP) between 5% and 6%.     

Verbesserung der Regierungsführung in den AKP-Ländern?

Die Europ?ische Union verhandelt zurzeit mit den AKP-L?ndern über so genannte Economic Partnership Agreements. Diese Abkommen haben vor allem die Entwicklung der AKP-L?nder als Ziel. Eine elementare Vorbedingung für Entwicklung ist die Qualit?t der Regierungsführung. Jedoch ist eine gute Regierungsführung in vielen AKP-L?ndern derzeit alles andere als selbstverst?ndlich. Wie kann die Europ?ische Union dazu beitragen, diese Missst?nde zu beheben und eine nachhaltige Entwicklung der betroffenen L?nder zu f?rdern? Sind die Economic Partnership Agreements überhaupt ein ad?quates Mittel, um diese Herausforderung zu bew?ltigen? PD Dr. Matthias Busse, 41, leitet den Kompetenzbereich Weltwirtschaft am Hamburgischen WeltWirtschaftsInstitut (HWWI); Steffen Gr?ning, 28, MA International Economics, ist Forschungsassistent am HWWI und promoviert an der Universit?t Hamburg. Dieser Artikel basiert auf einer Studie, die im Auftrag der Friedrich-Ebert-Stiftung durchgeführt wurde. Die vollst?ndige Studie kann von der Webseite des HWWI heruntergeladen werden: www.hwwi.org.     

Enlargement and the EU budget: The battles ahead

The coming enlargement of the EU is unprecedented as regards both the number of acceding countries and the wealth differentials existing between the Union's current members and the candidates. The contributors to this forum present their views on how the complex financial issues involved can be solved in a way that will enable the enlarging Union to continue to function while ensuring a fair distribution of the costs and benefits of enlargement. This article is part of the project “Membership of Central and Eastern European Countries in the EU” funded by the Otto Wolff-Stiftung, Cologne.     

A comparison of the constant-order and dual-index policy for dual sourcing

We analyze a single-product, periodic-review, stochastic demand inventory model with backorders and two supply options, a regular and a more expensive expedited one, with deterministic, offsetting lead times. Since the optimal policy for such a problem is generally unknown, several simpler policies have been proposed in the literature, e.g., the single-index (SIP), dual-index (DIP), or constant-order policy (COP). In previous research the DIP has been found to perform closely to the optimal policy in specific numerical settings. The COP, on the other hand, is very appealing from a practical point of view. We explore the relative cost performance of these two policies in a numerical study to gain insights into appropriate policy choices. We find that in settings, where dual sourcing is most valuable, the simpler COP delivers satisfactory results, sometimes even better ones than the DIP, and therefore represents a legitimate policy alternative for practical situations.     

Shaping Retail Brand Personality Perceptions by Bodily Experiences

Customer experiences play an important role in retail brand management. This research investigates how bodily experiences in retail environments influence customers’ perceptions of retail brand personalities. Based on research on human personality perception, we propose that bodily experiences transfer metaphoric meaning to customers’ brand perceptions. In a field experiment and a lab experiment we manipulated participants’ bodily experiences (feeling of hardness and temperature) and consistently found a metaphor-specific transfer of experiences to retail brand personality perceptions (on the dimensions “ruggedness” and “warmth”). A third study reveals the mechanism behind the effect and demonstrates concept activation elicited by bodily experiences in customers’ minds.     

Income,happiness, and the disutility of labour

We re-examine the claim that the income effect on happiness is downward biased because higher income demands more work effort. We find no evidence of an underestimation because the impact of working hours on happiness is rather small and hill-shaped.