Investigating the PPP hypothesis using constructed U.S. dollar equilibrium exchange rate misalignments over the post-bretton woods period

This paper investigates the PPP-hypothesis over the post-Bretton Woods period using a representation of the equilibrium exchange rate (EER) that is an alternative to the real exchange rate. The results provide evidence in support of the relative-PPP hypothesis over the current period of floating exchange rates (1974–2005); while stronger evidence is found for the post-Plaza Accord period (1986–2005). EERs based on export price indexes (EPI) and constructed traded goods price indexes (TPI) best demonstrate the mean reverting behavior of the spot exchange rate as opposed to those EERs based on CPI, PPI, or the GDP-deflator. This mean reverting behavior is slightly improved if one takes international interest rate differentials into account; however EERs extended by productivity differentials do not indicate any improvements over the base model. Over the post-Plaza Accord period average half-lives of less than 1 year are reported using TPI-based EERs, adjusted by interest rate differentials. For large misalignments, we find probabilities that the spot exchange rate will converge towards the constructed CPI-based equilibrium exchange rate of up to 80%. Lastly, over the post-Plaza Accord period, the TPI-based EERs are able to statistically significantly outperform the pure random walk at short-term forecast horizons of less than 1 year for some spot exchange rates.     

The cost of racially equal approval rates in mortgage lending

We investigate the feasibility of one solution to the problem of persistent unequal mortgage approval rates for different ethnic groups. Previous research suggests that a trade-off exists between equal approval rates for all ethnic groups and the ability of lenders to predict loan defaults. The purpose of this investigation is to measure the decline in the ability of underwriters to estimate the probability of loan defaults associated with a modification of the traditional mortgage underwriting process to produce an equal probability of approval for all ethnic groups. The primary conclusion is that the 4.2% increase in minority approval rates required to produce equal approval rates for the majority and the minority results in 15.1% more errors in the prediction of the number of defaults.     

Preventing unintentional childhood injury at home: injury circumstances and interventions

New Zealand's (NZ) preschoolers carry the greatest injury burden among children aged 0-14 years. These injuries commonly occur at home. To identify how NZ addresses child injury the 1990s national injury datasets and associated free text were examined retrospectively, NZ injury circumstances and interventions were compared to internationally recognised hazards and best practice, and whether NZ interventions addressed common circumstances of injury was assessed. Certain injuries, often associated with activities of daily living, were not addressed by interventions, although most interventions advocated internationally are implemented in NZ. Possible reasons for main injuries not being addressed were the specificity and variable effectiveness of interventions, normality of many injury circumstances, difficulties in evaluating complex environments, and the need for active intervention. There is considerable scope for NZ to improve its child safety. It is unlikely that simple solutions will be found for complex circumstances in which injury events occur. Strategies to address multifaceted problems requiring changes to personal, social and societal factors are required, with evaluation methods able to match their complexity.     

Race,homophily, and purchase intentions and the Black consumer

Black consumers are an important market for advertisers to reach. However, designing effective communication strategies is difficult. This study examines the moderation effect of ethnic identification (strength of identity with other blacks) on the tie between advertising stimuli (with racially congruent or incongruent actors) and the subject's perceived homophily (similarity) toward actors featured in ads, and if perceived homophily influences purchase intentions regarding advertised products. ANOVA found a significant interaction between ethnic identity and racial congruity on the perceived level of homophily. In addition, a simple effect for racial congruity on perceived homophily was found. Regression analysis subsequently found a significant effect for the level of perceived homophily on the level of purchase intent. Strategic considerations for marketing advertisers and future research ideas are also presented. © 2000 John Wiley & Sons, Inc.     

The Production Responses of the Competitive Firm to Three Conventional Distributional Shifts: a Unified Perspective

This paper presents a unified perspective on the production responses of the competitive firm to three conventional distributional shifts: (i) a rightward shift of the distribution, (ii) a Rothschild–Stiglitz increase in risk, and (iii) a Menezes et al. increase in downside risk. In particular, assuming that the von Neumann–Morgenstern utility is increasing and concave, and assuming its higher‐order derivatives are uniformly signed, we demonstrate that the production responses are unambiguous in the case of price less than or equal to marginal cost. In the alternative case of price greater than marginal cost, we then demonstrate that the production responses can be signed unambiguously by reference to sufficient conditions motivated by absolute risk aversion and by absolute prudence.     

Attitudes of food entrepreneurs towards two grant schemes under the first England Rural Development Programme, 2000–2006

Grant schemes introduced under the first England Rural Development Programme (ERDP) (2000–2006) have been subjected to limited academic research and this paper aims to fill this gap by examining the attitudes of food entrepreneurs in two contiguous English regions to two key elements of the ERDP: the Processing and Marketing Grant (PMG) and the Rural Enterprise Scheme (RES). It does this through a qualitative analysis of data gathered from interviews with 20 ‘adopters’ and 20 ‘non-adopters’ of the two schemes in the South West and West Midlands regions of England. The analysis reveals that, despite the rural development rhetoric, neither the PMG nor the RES was particularly effective at funding enterprises beyond the farm gate; both schemes also appeared to attract what can be described as ‘serial adopters’ and to discriminate against those without experience of applying for government grants. Nevertheless, indirectly they did provide opportunities to safeguard and expand local and regional food production, processing and retailing in the two regions.     

An examination of the impact of macroeconomic news on the spot and futures treasuries markets

In this study we analyze the reaction of daily cash and futures prices for several Treasury securities to the release of U.S. macroeconomic news. Some important results are reported. First, consistent with the notion of market integration, the futures market is found to be cointegrated with the corresponding cash market. Second, of the 23 types of periodic macroeconomic announcements, 19 of them have a significant influence on either the cash or futures prices. Most notably, surprises in nonfarm payroll and Treasury budget significantly influence the cash and futures market across the entire maturity spectrum. Third, consistent with the Fisher and real activity hypotheses, macroeconomic news that conveys higher inflation and/or economic growth has a negative influence on cash and futures prices. Finally, hedging with Treasury futures appears to offer investors protection from inflation‐related fluctuations in interest rates, but not against fluctuations arising due to variations in real output. Some important policy implications of the results are offered. © 2004 Wiley Periodicals, Inc. Jrl Fut Mark 24:453–478, 2004     

An Empirical Economic Development Based Model of International Banking Risk and Risk Scoring

The paper reconsiders the relationship between international banking risk and economic development. It is shown quite conclusively that the significant explanatory variables of international banking risk scores (when international banking risk is used as a proxy for country risk) are the income elasticity of demand for imports (when the latter is used as an indicator of economic growth and development), the phase of industrialization (based on country per capita income), and certain historical economic and financial variables (external debt levels and international bank size according to total assets). The investigation arrives at a new approach to risk scoring systems and models.